Viability of Jet’s resolution plan in significant doubt: lenders tell NCLT


MUMBAI : Jet Airways (India) Ltd’s creditors’ committee on Monday said the viability of the resolution plan submitted by the JalanKalrock consortium is being ‘seriously doubted’ because the successful resolution applicant (SRA) has not submitted an undertaking for the payment of dues to lenders.

The National Company Law Tribunal (NCLT) was told that since the SRA has not paid the lenders as well as the airline’s employees, according to conditions precedent (CPs) under its resolution plan, and delays in starting operations under Jet 2.0, the lenders had sought the solicitor general’s opinion, while the SRA had consulted former Chief Justice of India Deepak Mishra.

“The opinion of the solicitor general was that there is significant doubt over whether the CPs have been completed. The advice received was that even if the CPs were not complied with, the resolution plan could still be implemented subject to getting comfort (in the form of an undertaking) from the SRA that even if the CPs are not met deferred consideration obligations will be paid by the Jalan- Kalrock consortium. This is, however, subject to necessary approval from the NCLT,” said Rohan Rajadhyaksha, a counsel representing the committee of creditors.

An undertaking is to ensure that deferred considerations under the resolution plan will be paid by the consortium in its entirety, he added.

According to the resolution plan, an upfront payment of 185 crore had to be made to the lenders.

Subsequently, the SRA had to pay another 195 crore in deferred considerations via Series-A zero coupon bonds within 730 days, or by 20 May, 2022, after commencing operations.

Apart from the bonds, there are debentures of 391 crore to be paid to lenders by Jet 2.0 by the end of five years from the date of starting operations.

“This money is not coming from the SRA but Jet 2.0 (proposed by the SRA in its revival plan). Jet running in a proper manner, with the slots and the original business plan envisaged in the resolution plan, is important for the plan’s viability for the lenders. But, if the airlines does not have the slots, where are they going to get the 195 crore to pay the lenders?” the counsel argued.

Rajadhyaksha said the SRA is alleging that the lenders had been ‘arm twisting’ and altering the resolution plan when it was asked to provide an undertaking, despite not being able to secure a single (airport) slot in Bombay or Delhi. In fact, the consortium has only received conditional approval, but is in complete denial.

The NCLT will continue to hear the matter on Tuesday.

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