Almost 17 months since the Resolution Plan was approved, ownership of Jet Airways has not been transferred to the buyer — the Jalan-Kalrock Consortium. Indications are of a standoff between Jet’s lenders and the consortium over payment timelines. The consortium now says it will make payment only after lenders transfer the ownership of Jet Airways.
CNBC-TV18 reported on November 10, that the consortium has not paid any of the committed amounts to either lenders or employees and is likely to miss the payment deadline. The resolution plan was approved by the National Company Law Tribunal (NCLT) in June 2021, the consortium had fixed May 20, 2022, as the effective date of the plan. It proposed to pay Rs 185 crore as the first tranche to lenders within 180 days from the effective date and Rs 52 crore in full to employees within 175 days from the effective date. Accordingly, it should have paid employees by November 11 and lenders by November 16.
Responding to CNBC-TV18’s report, the consortium said these deadlines were conditioned to lenders transferring the ownership of Jet Airways to Jalan-Kalrock Consortium within 180 days of the effective date.
“As the handover from the lenders is still awaited, the revised payment timelines are yet to be determined. We confirm that the Jalan-Kalrock Consortium is in full compliance with the approved resolution plan,” it added.
This is the first time the consortium is pointing out why payments have not been made yet, indicating a potential standoff with lenders.
Sources had told CNBC-TV18, lenders are unlikely to transfer the airline’s ownership to the buyer until the first tranche of payment is paid.
This is not the only bone of contention.
The NCLAT order in October directed the consortium to pay PF & gratuity dues in full to all eligible employees until the commencement of Insolvency i.e June 2019. As per sources, this amount works out to over Rs 200 crore, which the consortium had not accounted for while finalising the plan.
Responding to CNBC-TV18’s query, the consortium indicated it won’t be making this payment.
“The NCLAT orders do not impact JKC or their plans for the revival of Jet Airways as their liabilities towards erstwhile creditors is capped at Rs 475 crore and all claims will have to be settled within the said capped amounts,” it said.
So if the consortium does not pay this additional amount then who will?
Lenders of the erstwhile airline have taken a massive haircut of 95 percent in the resolution process. Of the total admitted claim of over Rs 7,800 crore, the consortium had offered to pay them Rs 380 crore in two tranches, Rs 185 crore of which was to be paid within 180 days from the effective date.
The new management of the airline has been missing multiple self-set targets to return to the skies. Earlier statements by the consortium had signalled all is well within the airline.
In a response to CNBC-TV18’s query on September 27, the consortium said it is very close to finalising the initial fleet and restarting operations in the coming weeks.
"Reviving and re-starting an airline is a complex process,...we had said we were targeting to launch by October 2022, and we are tracking quite close to that,” the consortium had said.
Even as ownership transfer is awaited, the consortium said that the NCLT process does not restrict it from leasing aircraft or placing aircraft orders.
But CNBC-TV18 learns that the consortium won’t be allowed to lease aircraft in the name of Jet Airways until it has ownership of the airline. Not just an adequate fleet, JKC will also require allotment of slots and routes before opening for bookings.
However, the consortium is confident.
“On the operational front, we are ready and waiting to open bookings, with all commercial agreements and pieces lined up,” it said.
With payments not made, ownership not transferred, and fleet not in place, the take-off of Jet Airways in the current avatar looks quite hazy.
