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In a major relief for the Jalan Kalrock consortium, which emerged as the successful bidder to take over Jet Airways, the National Company Law Appellate Tribunal (NCLAT) has granted an extension of 107 days, until August 30, to fulfill its payment obligations. JKC had approached the NCLAT after State Bank of India threatened to invoke bank guarantees.
On May 26, the NCLAT noted that although the National Company Law Tribunal (NCLT) had approved the resolution plan in January, the case came before the NCLAT in March, and an order of refusal of stay was passed on March 3. Therefore, the tribunal concluded that Jalan Kalrock is entitled to an exclusion from November 16, 2022, to March 3, 2023, regarding the payment obligations towards SBI.
The NCLAT criticised SBI for threatening to invoke bank guarantees, instead of cooperating with Jalan Kalrock in implementing the resolution plan. The tribunal emphasised that the monitoring committee, of which SBI is a part, should act as a facilitator for the plan’s implementation, rather than finding fault and taking actions that hindering or delaying the process.
The NCLAT’s order stated that it is not yet time for lenders to take coercive measures, as Jalan Kalrock is still working on implementing the resolution plan. While the Performance Bank Guarantee can be invoked by lenders, it can only be done if Jalan Kalrock fails to implement the plan. Since directions have been issued to both lenders and Jalan Kalrock to implement the plan and the plan’s failure has not occurred, the invocation of the guarantee is not warranted at this stage.
Consequently, the NCLAT directed SBI not to invoke the performance bank guarantee, granting Jalan Kalrock Consortium additional time to fulfill its dues. The order was announced earlier than expected, even though it was originally scheduled to be passed on May 30.
On January 13, the NCLT had approved the transfer of Jet Airways to the consortium led by Kalrock Capital and entrepreneur Murari Lal Jalan. The consortium was required to make payments by May 15, but the NCLAT’s exemption provides them with additional time.
However, the consortium has yet to obtain the Air Operators’ Certificate (AOC), and there is a possibility that the lenders may seek clarification or challenge the NCLAT’s order.
Jet Airways had been grounded since April 2019 due to significant losses and a debt of around ₹8,000 crore. In October 2020, the airline’s Committee of Creditors approved the revival plan submitted by the Jalan-Kalrock consortium.
The resolution process has faced challenges, with lenders opposing the transfer of ownership to the consortium, claiming that their obligations have not been fulfilled. The ownership transfer cannot proceed unless the payment is made. Additionally, Jet Airways’ Air Operator’s Certificate expired on May 19.
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