Jet Airways Insolvency: Resolution Professional Moves NCLT Seeking Interim Financing

The resolution professional of Jet Airways India Ltd. moved the National Company Law Tribunal today seeking direction against certain members of the committee of creditors for speedy release of funds for interim financing.

“Jet Airways is facing complications in receiving funds from abroad,” the counsel representing the resolution professional said, adding that without timely interim financing, the “corporate insolvency resolution process would come to a grinding halt”.

The committee of creditors of the grounded carrier approved interim financing measures in its previous meetings. The debt-ridden airline is facing operational difficulties as some committee members are yet to release the sanctioned funds.

Property Dispute with Luckystar

Janak Dwarkadas, the counsel representing Luckystar Property Holdings—the owner of the building that houses Jet Airways’ headquarters in Mumbai’s Andheri suburb—said the company has filed consent terms with the airline’s committee of creditors for its consideration and approval. “However, the minutes of the CoC meeting haven’t been given to Luckystar.”

Luckystar had, in June, moved the National Company Law Tribunal to get back its property.

As per the settlement proposed by the parties:

• Jet Airways will vacate the premises within 45 days of filing and notation of the consent terms in the tribunal.
• Luckystar will forego certain existing claims towards the airline.
• All incidental costs arising from this process would be included in the insolvency resolution costs.
• Luckystar will submit claims to Jet Airways for a pre-CIRP cost of Rs 3 crore.

The counsel representing the committee of creditors said they deliberated on approving the consent terms with Luckystar at a meeting on Aug. 26. However, as no resolution was submitted, the tribunal directed the parties to file a copy of the resolution passed by the committee indicating the settlement terms.

Property Dispute with HDFC

Jet Airways had borrowed nearly Rs 400 crore from Housing Development Finance Corporation Ltd. for which it had mortgaged three floors of its property in the Bandra Kurla Complex business district as collateral. In July, HDFC moved the tribunal seeking to exclude this property from the bankruptcy process to recover the loan amount.

HDFC had proposed a settlement with Jet Airways on this dispute in August. The counsel representing the resolution professional informed the tribunal the settlement terms proposed by HDFC have been unanimously rejected by the creditors’ committee. The resolution professional would, therefore, continue contesting the matter at the tribunal on failure of ongoing settlement talks.

Progress In Insolvency Resolution

The resolution professional’s counsel informed the tribunal that Jet Airways had received interest from two prospective applicants. The chairman of one of the applicants is discussion with officials from the civil aviation ministry and central government.

The tribunal adjourned proceedings till Oct. 9.