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Lenders to Jet Airways will take a legal opinion on Naresh Goyal’s bid to retake the control of the debt-ridden airline. Goyal, the founder of the airline, was the last to put in his expression of interest, minutes before the the deadline ended on Friday.
“The lenders will seek a view on whether to consider Goyal’s bid as a financial or a strategic investor. There is also the question of allowing an existing promoter to bid for the company after the airline defaulted on payments,” said a source close to the bidding process.
While the rules under the Insolvency and Bankruptcy Code (IBC) clearly bars defaulting promoters from bidding for the assets on sale, ‘the bidding process for Jet Airways is not being done under the IBC code’. However, the lenders want to be sure that Goyal’s bid can be accepted.
Goyal’s exit
On March 25, Goyal, the Promoter and Chairman of Jet Airways, along with his wife Anita Goyal, was forced to step down from the board after the company defaulted on payments. The lenders had also converted a substantial part of his pledged shares into equity.
At that time Goyal had said that he agreed to sacrifice his control and interest in the airline with the sole aim to ensure the Jet family’s lasting welfare. His exit was seen as a welcome move by the lenders as it paved the way for bringing in a new investor to revive the ailing airline.
Also read:The return of Naresh Goyal?
Goyal’s attempt to come back through the bidding route, initiated by the lenders, could make the process more complex.
Other bidders
“Some of the other bidders such as Etihad may not be comfortable if Goyal is in the fray. This raises serious doubts on the entire process,”said a source close to one of the bidders. But other experts said that since there was no bar on any entity from bidding, the lenders should have anticipated Goyal’s interest.
Also read:Etihad, NIIF submit EoI for Jet
Under an earlier plan, Goyal’s stake in the airline was to come down to 17 per cent, but he wanted lenders and joint venture partner Etihad to leave the door open for him to buy back shares.
The draft agreement between all parties had put a cap of 22 per cent on promoter stake. Goyal wanted the cap removed so that he can claw his way back once the financial crisis is over.
“It was clear that Goyal would not let go of Jet easily. If the lenders really did not want him back, they could have easily put in adequate rules. Given that they have not, Goyal has every right to make a bid. Whether that stands the test of good corporate governance or not is another matter,” said an industry expert.
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