Jet Airways Admitted To Insolvency By NCLT
The National Company Law Tribunal in Mumbai has admitted Jet Airways (India) Ltd. to the corporate insolvency resolution process under the Insolvency and Bankruptcy Act, 2016.
While the NCLT order has yet to be published on the NCLT website, the two-member bench of VP Singh and Ravikumar Duraiswamy directed the resolution professional to takeover the assets immediately and to submit fortnightly reports starting July 5. Operational creditors, including pilots seeking salary dues, have been directed to file claims with the resolution professional. The case is next listed on July 5, to get details on the progress report.
Curiously, late Thursday afternoon Jet Airways shares spiked 150 percent with most of the gains added in the last hour of trade. The National Stock Exchange recently decided to move the stock from rolling to trade-to-trade segment from June 28.
Insolvency Proceedings So Far
The SBI counsel argued on Thursday morning that SBI had extended an initial working capital facility of Rs 505 crore to Jet Airways, which was then converted into an overdraft facility. After that, additional Rs 462 crore was lent to the carrier to meet working capital requirements. The payment was due on May 15, and since Jet Airways could not meet its obligation within 30 days, this was considered as the date of default, the counsel said. The SBI had also extended a term loan of Rs 1,290 crore to Jet Airways, the counsel said.
Jet Airways, which owes lenders more than Rs 10,000 crore, has halted operations after failing to pay employees, lessors and lenders. SBI and Punjab National Bank are its largest lenders with close to Rs 2,000 crore in loans.
The banks’ counsel today also argued against inclusion of any intervening application of the Netherlands-court appointed trustee, citing that under the bankruptcy code, petitions under Section 7 have primacy. And that so far, India has not ratified any cross-border insolvency treaty or convention. Section 7 of the IBC gives power to a financial creditor to file an application against a corporate debtor.
Two Netherlands-based logistics vendors of Jet Airways had confiscated a passenger jet of the company at the Amsterdam airport in March seeking dues. In May, a local court ordered bankruptcy process against the grounded airline and appointed Rocco Mulder as the administrator for the proceedings.
Besides the two Dutch vendors, unions of pilots and engineers of Jet Airways are also seeking to be made parties to the bankruptcy hearings. The counsel representing the operational creditors comprising 1,100 pilots argued that they have dues around Rs 546 crores against salaries not paid since January.