The Jalan Kalrock Consortium (JKC), the would-be new owners of Jet Airways (JAI, Mumbai International), enjoyed a significant victory at the National Company Law Appellate Tribunal (NCLAT) this week when the specialist bankruptcy court approved the ownership transfer and ordered it to be done within 90 days.
The NCLAT handed down its decision in the case, State Bank of India & Others. v. the Consortium of Murari Lal Jalan and Mr Florian Fritsch, on March 12. The court ordered the monitoring committee, a panel comprising three creditor/lender representatives, three airline representatives, and an independent chairman, to complete the ownership transfer, initially approved in 2021, within three months. It also ordered Jet Airways to secure its air operator's certificate (AOC) within the same time frame.
Jet Airways collapsed in April 2019. The administrator later admitted creditor claims of INR78 billion rupees (USD941 million). The State Bank of India was carrier's biggest lender. In 2021, in return for allowing JKC to buy what remained of Jet Airways, the consortium agreed to pay INR3.5 billion (USD42.2 million) to settle all creditor claims. The National Company Law Tribunal (NCLT) later ratified the decision and the so-called resolution plan, an agreed-upon roadmap to facilitate the airline's smooth ownership transfer and relaunch. However, the relationship between the consortium and the lenders, spearheaded by the State Bank of India, rapidly deteriorated into a series of legal wrangles, claims, and counterclaims.
In January 2023, the NCLT ordered the ownership transfer, but the lenders immediately challenged this, alleging that the JKC had failed to comply with the resolution plan.
As of January 31, 2024, INR1.5 billion (USD18.1 million) of the INR3.5 billion payable remained outstanding. The consortium had wanted the lender to use a previously provided bank guarantee to cover the amount, which the lenders declined to accept. This week, the court ordered the lenders to create a security within 30 days on three Dubai properties the JKC offered. The lenders must then adjust the security against the INR1.5 billion outstanding.
The INR1.5 billion bank guarantee "which is laying with the monitoring committee shall be adjusted towards the first tranche payment of INR3.5 billion, as INR2 billion has already been paid" by the consortium, the court said. Payments due to former employees, pension funds, and other creditors are to be deducted from the INR2 billion already paid, it added.
"No relief was granted to lenders," the airline's statement reads. "Jet Airways can start business and operations, subject to regulatory approvals, after handover."
The State Bank of India and other lenders can appeal the NCLAT decision to the Supreme Court, India's top court, which has previously demonstrated a reluctance to interfere with Jet Airways NCLT and NCLAT rulings.
