Jet Airways, which started off as an air taxi operator in 1993 and became a scheduled carrier in 1995, has been under insolvency for two years after it shut operations in April 2019 under a heavy debt. Jet Airways is the first Indian carrier/airline to undergo insolvency proceedings under the Cross Border Insolvency Protocol along with the Insolvency and Bankruptcy Code (IBC) of India.
A Company petition was filed in the National Company Law Tribunal (NCLT), Mumbai against Jet Airways (India) Limited ("Company") u/s 30(6) read with Section 31 of the Insolvency and Bankruptcy Code (IBC), 2016 for the initiation of insolvency proceedings by State Bank of India in the capacity of it being a Financial Creditor to the Company.
An applicant name Ashish Chhawchharia was a Resolution Professional for Jet Airways (India) Ltd. An application was filed by the Resolution Professional seeking approval of the Resolution Plan submitted by Jalan Fritsch Consortium, which consists of Mr. Murari Lal Jalan (a Non-Resident Indian based in United Arab Emirates) and Mr. Florian Fritsch (Kalrock Capital Partners Ltd, Cayman [KCPL]).
The Insolvency Resolution Plan was approved by the Committee of Creditors as well as the NCLT, Mumbai via order dated 22nd June 2021.
The tribunal decision comes exactly two years after the insolvency procedures began. The Mumbai bench of the National Company Law Tribunal (NCLT) cleared the resolution plan to revive Jet Airways and directed the Jalan-Kalrock consortium to get the required approval and licences to restart the airline within 90 days.
The tribunal rejected pleas by lawyers representing the Ministry of Civil Aviation (MoCA) and the Directorate General of Civil Aviation (DGCA) against the approval. DGCA and MoCA previously stated that the consortium cannot claim historicity on slots that were held by Jet before its bankruptcy. The slots were later distributed to other airlines. Hence, the consortium's demand for historicity of airport slots was rejected. With reference to Section 14(1)(d) of the Code, the learned senior counsel appearing for the Union of India relied upon the principle enunciated by the Hon'ble Apex Court in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority & Anr.: (2020) 13 SCC 208 and submitted that the Corporate Debtor was not in possession of the slots on the date of the insolvency commencement. It accordingly cannot claim any right to the slots.
In October 2020, the committee of creditors (CoC) approved the Jalan-Kalrock consortium's resolution plan. The consortium proposes to invest ₹600 crore in the first two years to repay creditors and acquire an 89.79% stake in the carrier. The resolution plan also proposes selling existing non-core assets such as real estates and luxury cars by the end of the first year and said it will repay to financial creditors, ₹131 crore, ₹193 crore, ₹259 crore at the end of the third, fourth and fifth years, from the airline's cash flows, respectively. The company intends to repay creditors a total of ₹1,183 crore over five years, which includes collections from asset sale proceeds and cash flows.
As a result, the new promoters will also retain the 'Jet Airways' brand and will resume operations with about 25 aircraft, with a base in New Delhi, and restart international flights soon after. Accordingly, the Articles of Association (AoA) and Memorandum of Association (MoA) shall be amended and filed with the Registrar of Companies (RoC) concerned for information and record. For the plan to be implemented effectively, the Resolution Applicant shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed. The Monitoring Committee shall supervise the implementation of the Resolution Plan and shall file Status Report of its implementation before this Authority from time to time, preferably every quarter.
The Hon'ble Apex Court observed that the role of the NCLT is 'no more and no less'. The NCLT matter was taken up the Coram: Janab Mohammed Ajmal, Hon'ble Member (Judicial) Shri V. Nallasenapathy, Hon'ble Member (Technical). The order pronounced I.A. No. 2081/2020 in C.P. (IB) No. 2205/MB/2019.
The Resolution Plan submitted by consortium of Mr Murari Lal Jalan and Mr Florian Fritsch annexed to the Application is hereby approved. It shall be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, any State Government, or any local authority to whom a debt in respect of the payment arising under any law for the time being in force is due, guarantors and other stakeholders involved in the Resolution Plan. Therefore, the resolution plan was so accepted and approved.
Jet Airways: An Insolvency Resolution Journey
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