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The Insolvency Resolution Professional (IRP) appointed by the National Company Law Tribunal (NCLT) has told the pilots and staff of Jet Airways that their salary dues may not be settled fully as the company is undergoing the insolvency process.
In a meeting with the Jet management the IRP, Ashish Chhawchharia, Partner, Grant Thorton, charted out two possible scenarios for clearing dues.
If the insolvency process is successful and the IRP is able to bring in a new investor, then the past dues will depend on the amount or percentage of the amount that the successful bidder is willing to pay, which may or may not be in full. However, if the resolution process is not successful, the company will go into liquidation and the employees’ dues will be paid as per the waterfall mechanism.
This means that NCLT expenses will be the first priority. Workmen’s compensation, pending for 24 months, and the dues of secured lenders come next.
The dues of other staff, pending for 12 months, and the payment to the unsecured creditors will be the third priority.
The resolution process began on June 20 when the NLCT’s Mumbai Bench admitted the plea of the State Bank of India, Jet’s financial creditor. In the order passed, the NCLT declared the company as insolvent and started the resolution process.
According to sources, during the meeting held between the remaining management of the debt-strapped airline and Chhawchharia, a road map for Jet’s possible resolution and the bid to find a suitable investor were discussed.
Sources said that the IRP told the employees that finding a new investor within 90 days is a fairly stiff target, and requested co-operation. Jet Airways owes over ₹14,000 crore to financial and operational creditors.
Liquidation is the last option as historically it has resulted only in 20 per cent recovery of debts against assets.
Employees uncertain
Two employee associations of engineers and pilots have already filed their claims. The IRP will start admitting claims from creditors as per advertisement, which will be circulated in newspapers.
A pilot, who worked with the airline for eight years, said: “Just like a few other creditors have already written off their debts towards the employees, I too have written it off. Now, whatever I get is a bonus. If the process fails then we stand no chance. However, if it goes well we still may get at least 50 per cent."
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