Jet Airways’ re-launch: Standoff over PF and gratuity dues

The court had asked erstwhile Resolution Professional Ashish Chhawchharia to compute these payments within a month and communicate the same to the consortium. However, in the application, JKC has appealed to the court to clarify if the winning consortium has been directed to pay these dues.

Citing excerpts from the Resolution Plan, Jalan-Kalrock has said that any additional payments over the approved Rs 475 crore should first be paid from the positive bank balance of Jet and the remaining from Rs 475 crore, which is reserved for various creditors.

The break-up of this Rs 475 crore includes Rs 380 crore to be paid to lenders and Rs 52 crore to employees and workmen and the remaining towards other operational creditors, none of which has been paid as yet by the consortium.

It must be noted JKC’s application in the NCLAT coincides with the Nov 16 deadline to pay upfront Rs 185 crore as the first tranche to lenders.

It is important to highlight that as per the Resolution Plan, the consortium estimated the total dues of employees and workmen at Rs 113 crore, of which it had committed to pay Rs 52 crore and the remaining Rs 61 crore was to be deducted from the first tranche of payment to lenders.

After having taken a 95 percent haircut on their loans, sources say lenders are unlikely to agree on paying PF and gratuity dues from the few hundred crore that they are yet to receive.

Jet’s positive cash balance that JKC is referring to was estimated to be around Rs 225 crore in January when the consortium moved the NCLT seeking permission to use this money for the airline’s expenses until the resolution plan takes effect. However, the court dismissed its application in March.

The consortium has again attempted to draw the court’s attention towards the positive cash balance of the airline to make PF and gratuity payments which as per sources come to over Rs 200 crore.

JKC had committed to infuse Rs 900 crore towards capex and working capital. So far it has deposited only Rs 150 crore as a performance guarantee.

But the consortium claims to have spent a lot on the re-launch efforts.

“JKC has, till date, spent considerable amounts towards the revival of Jet Airways and continues to incur expenses for the re-launch of the airline,” it told CNBC-TV18.

The airline’s revival has taken much longer than expected with the consortium missing multiple targets set for its take-off.

On Nov 11, JKC told CNBC-TV18 it is waiting for lenders to transfer ownership of the airline, only after which payment timelines will be determined. As reported earlier, lenders are unlikely to hand over the airline to the buyer consortium without receiving their first tranche of payment. While there is no official word from the lenders so far, the latest developments are directing to a growing impasse that is threatening Jet’s turnaround.