‘Jet debt resolution process was like putting pieces of a puzzle together’

Forum Gandhi Mumbai | Updated on October 27, 2020

Ashish Chhawcharria

Resolution professional Ashish Chhawcharria says the stress in airline sector due to pandemic turned out to be a positive

Ever since the banks took over the management of debt laden Jet Airways, Ashish Chhawcharria has been working round the clock to find a new owner for the airline. As the resolution professional appointed to ensure that the airline stays afloat, Chhawcharria has been talking to employees, dozens of interested players, lenders and the government. After over a year of discussions and four rounds of inviting bids, a consortium of Kalrock Capital and UAE-based business man Murari Lal Jain has been picked to run the airline. BusinessLine spoke to Chhawcharria to get his views about the IBC process and the future prospects for Jet Airline. Excerpts:

What was the biggest hurdle in getting a new owner for Jet?

The uniqueness of this sector was a challenge. Jet is the first company in the service sector of this size. Payments to multiple global lenders, refunds to passengers, and the number of employees made it a complex case.

How did you deal with it?

The last airline to go bankrupt was Kingfisher, at that time there was no IBC. Jet is the first in the aviation sector, so we didn’t have a bible to go by. It is a unique case that needed unique solutions. So you roll up your sleeves and, and one by one try to unravel the issues, understand the challenges, and find the solutions.

The first challenge was to get the full picture. At the time when we took over Jet, its directors had resigned, we had to make do with the junior team and a handful of managerial staff. They didn’t know the full picture at all. They spoke to the former bankers who had lent money to the company, got to know what had happened from their perspective, and then try to correlate it with what’s happening in the company. It was like putting pieces of a puzzle together. The other challenge was the pressure of managing the aircraft which lose value if undermanaged, so the employees of Jet made an asset preservation team to maintain the aircraft.

Do you think now Jet can survive?

We are certainly very hopeful, and certainly very positive. If I didn’t have the optimism, probably I would have given up long back. But we kept at it and that’s why we are here today. Given that Jet’s acceptability remains so high I feel that if Jet revives, and starts selling tickets, there’ll be a huge number of takers.

Did you at any point think it was end of the road for Jet?

After three rounds of effort, this was going to be the last effort. That was very clear I pressed it with the lenders that there’s no point going on because there is a cost they are paying too.

We had already crossed 270 days (since the process started) and then we had taken a short extension from the court and March, just before Covid-lockdown but Covid had already started showing its colours.

That was when we thought it was the end and it may go down because of the way the aviation sector would be impacted, slots were underused by others too because of lower demand, aircraft were lying vacant and the lease rentals for them were lowered. But that became a good thing for us because all the airlines were facing a challenge and it became a level playing field. Then we started getting value buyers. So what was adversity, became an opportunity for us.

Do you think the IBC is effective in getting the best deal for banks or is it something that banks are settling for in the absence of other options?

Firstly, the banks compare liquidation value versus revival plan value. But in this case, they saw the actual value of what was coming out from protecting Jet. The banks looked at this in a very positive manner and looked at it as a national infrastructure brand that was greatly raised over 25 years. They told us that though, letting go would be way easier but Indian aviation needed and had the opportunity for growth and if possible, Jet should be a part of it.

Would you like to see any changes in the IBC rules to make it more efficient?

It’s new, it’s growing but it needs cross-border rules. Plus some guidelines around implementation post NCLT approval.


Published on October 27, 2020

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