After five months of trying to find an investor to salvage Jet Airways, lenders to the airline on Monday decided to refer the debt-laden company to the National Company Law Tribunal (NCLT) to start insolvency proceedings. The move comes after the lenders failed to get a suitable offer from any of the potential investors.
A meeting of lenders was held on Monday to decide on the way forward. After the meeting, State Bank of India, the lead lender, in a statement said: “After due deliberations, the lenders have decided to seek resolution under the Insolvency and Bankruptcy Code (IBC) since only a conditional bid was received and the requirement of the iInvestor for SEBI exemptions and resolution of all creditors is possible under the IBC.”
Only one bid received
The lenders had received only one bid from Etihad Airways, which had offered to take a minority stake but had set conditions. There was an attempt to rope in the Hinduja Group as the other significant investor but the talks did not materialise.
“Lenders led by SBI have been taking efforts to find a resolution for Jet Airways outside the IBC, but in view of the above, the lenders have decided to seek a resolution within the IBC process,” the statement added.
The move to drag the company to the NCLT is a last ditch effort by the lenders to recover their dues. Jet Airways owes over ₹14,000 crore to financial and operational creditors. However, industry analysts and employees of the company are not hopeful of a revival of the airline.
Ravi Kini, Managing Partner, MV Kini & Co, said: “In the current situation, it is very unlikely that Jet will get a buyer as a going concern, so most likely it will be liquidated.”
Asim Vailani, Vice-President, National Aviators Guild (NAG), the association representing Jet pilots, said: “This has come as a disappointment. This could have been done almost three months back. I don’t know why there was so much wastage of time, effort and energy for everyone.”
NAG and other employees are hoping to at least recover their salary dues by joining the NCLT-led process. The company owes nearly ₹400 crore in salaries.
Captain Parikshit Joshi, a NAG committee member, said: “If this is being done to salvage the airline and revive it, it’s too late. We don’t know what will be left with the airline post this.”
According to sources, both Etihad and Hindujas wanted to start on a clean slate with the company debt wiped out from the books. According to one estimate, the investors needed to pump in ₹Rs. 5,600 crore immediately to get the airline operational.
The NCLT’s Mumbai Bench last week had adjourned hearings in insolvency cases filed by two operational creditors — Shaman Wheels and Gaggar Enterprises — against Jet Airways to June 20, as representatives of the grounded airline were not present. The lenders will now join the two operational creditors.
‘Bids were frivolous’
Jet Airways had temporarily shut operation on April 17. At its peak, the airline had 22,000 employees, including 6,000 contract staff.
“I think government should have acted much faster, much earlier I think. Lenders should not have spent so much time in trying to identify a potential suitor. They were all frivolous bids,” said Arvind Gupta, a minority shareholder.
On Monday, the Jet Airways scrip tanked 16.76 per cent to close at ₹68.30 on the BSE.