NCLAT lets JKC pay Jet dues by 30 Sep

The National Company Appellate Tribunal (NCLAT) extended a crucial lifeline to the grounded airline Jet Airways on Monday, offering much-needed relief for its revival prospects. The airline’s successful bidder Jalan Kalrock Capital Consortium (JKC) received an extension till 30 September to settle dues totaling ₹350 crore owed to lenders of the airline.

This adjustment of the performance bank guarantee effectively reduces the total payable amount to just ₹200 crore. The consortium plans to make this payment in two instalments— ₹100 crore by 31 August and another ₹100 crore by 30 September.

Following 30 August, the NCLAT will address the remaining pleas in the case, including a plea from the workmen seeking the recovery of their dues totaling around ₹224 crore.

In previous proceedings, the lenders were open to extending the deadline for the consortium but contested the changes to the resolution plan, particularly the introduction of a performance bank guarantee worth ₹150 crore. However, the recent court order dismissed the lenders’ objections and allowed the encashment of the bank guarantee.

The lenders in the case had argued that the consortium is facing challenges in paying ₹350 crore due to their overall claim of ₹8,000 crore. A portion of this claim is allocated for settling airline dues at the airport. The lenders highligh-ted that the total cost of maintaining the airline amounts to ₹390 crore, incurring a monthly expense of ₹22 crore.

In response, the consortium argued that the lenders are hindering the transfer of ownership by creating legal roadblocks. The consortium also urged the court to direct the lenders to initiate the transfer of ownership proceedings within 15 days of the dues payment. According to JKC, the transfer to the consortium won’t occur smoothly due to the need for various approvals, including those from stock exchanges and Sebi, as well as the cancellation of previous shareholdings held by the former promoters.

Initially, the consortium needed to deposit ₹350 crore to the lenders by 31 August. However, on 18 August, the consortium proposed a new payment schedule which was approved via Monday order.

On 5 July, the Committee of Creditors had told the Supreme Court that it might be more prudent to wind up the airline, given they have not been repaid, and no funds infused into the debt-laden airline. Lenders have infused approximately ₹400 crore of public money into the airline, which includes settling airport dues.

According to the January order by the Mumbai bench of the tribunal, the effective date of the resolution plan was taken as 16 November. As a result, the consortium has six months from the said date to make payments to lenders.

On 22 June 2021, the NCLT in its order approved the resolution plan for Jet Airways submitted by the Jalan-Kalrock consortium. The consortium comprises UAE-based non-resident Indian Murari Lal Jalan, who will hold shares in Jet Airways in his personal capacity, and Florian Fritsch who will hold shares through his investment holding company Kalrock Capital Partners Ltd, Cayman.

Jet Airways stopped flying in April 2019 after running into financial difficulties. However, ownership transfer has been hanging fire amid continuing differences between the lenders and the consortium.