Once India’s largest private carrier, Jet stopped flying in April 2019 after running out of cash.
Mumbai:
The future of Jet Airways hangs in the balance as the creditors of Jet Airways and the new owners of the company are at loggerheads over a resolution plan to get Jet Airways out of bankruptcy.
A senior banker said that if no solution is found during the crucial court hearing on Tuesday, the creditors may approach the aviation ministry to seek approval to sell Jet’s assets.
“There has been too much delay… There are concerns that the resolution plan may fail, so we are looking to see if we can at least get something out of this deal through the liquidation route,” said the banker, who has Direct knowledge is matter, said.
A spokesperson for Jet’s new owners said in a statement that the resolution plan is binding on all parties involved and was approved by the bankruptcy court.
We are “working closely” with Jet’s former creditors to implement the plan, and are “fully committed” to getting Jet Airways off the ground.
State Bank of India, the lead lender in the consortium of creditors, declined to comment. The court-appointed resolution professional overseeing the case did not immediately respond to an email request for comment.
Jet, once India’s biggest private carrier, stopped flying in April 2019 after running out of cash and being taken to bankruptcy court by creditors who were owed about 180 billion rupees ($2 billion).
Last June, a restructuring plan was approved by the National Company Law Tribunal (NCLT) and the airline is set to resume operations by the first quarter of 2022 under its new owners – London-based Kalrock Capital and A consortium including UAE-based businessman Murari Lal Jalan.
However, disagreements over the riskiness of the plan between the company’s new owners and lenders are derailing Jet’s recovery.
Lenders believe Jet needs capital of around Rs 10 billion to fully run its operations, but banking sources said it has not been able to bring that amount to the table.
“So far they have only shown that they have received bank guarantees of 1.5 billion rupees and about 200 million in cash, which is not enough to run operations,” he said.
However, another source close to the airline said that Jet has complied with all the conditions of the resolution plan and the committee of creditors has also scrutinized the fund-raising capacity of the Jalan-Kalrock consortium.
The person said 10 billion rupiah is to be injected into the carrier over a two-year period with 2.7 billion rupiah to be paid immediately to banks and other creditors.
A source close to Jet said the creditors were causing unnecessary delay by not approving the resolution plan.
Bankers disagree.
A banker from another lender bank said, “We are not able to trust the consortium (of Jet’s new owners) as we feel they have not fully invested in the resolution plan.”
“It seems they don’t have much say in the game, instead they want the bank to do all the work,” he said.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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