Jet Airways makes final landing in NCLT court
Lenders to move bankruptcy court today, sealing the fate of the mothballed airline
Lenders of Jet Airways have decided to take the grounded airline to the bankruptcy court in a last-ditch effort to recover whatever possible of the Rs 15,000 crore debt, effectively dimming any hopes of a revival of the airline. Jet had stopped operations on April 17, 2019, after it ran out of cash.
Lenders are now hoping that some bidder would be attracted to take over the airline under the Insolvency and Bankruptcy Code 2016.
Being the second major domestic airline after Kingfisher Airlines to fly into the sunset in the last seven years, the signal is clear to consumers that the resultant aircraft shortage will keep airfares high for some time. After failing to get Jet a new investor to replace founder Naresh Goyal, lenders led by State Bank of India (SBI) on Monday decided to tap the bankruptcy court.
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Though bankers led by SBI managed to displace Goyal from the Board, they were unable to find a credible investor with deep pockets. However, in hindsight, the move should have come earlier so that the cash reserves of the airline would not have dried out.
"There is a conditional bid. Others can also bid. In airlines, its licence, brand and slots have some value," said SBI chairman Rajnish Kumar, who worked hard to rescue the airline from the mess. It is to his credit that Goyal was ousted from the Board of the airline.
This is the second time that the revival of the airline is getting derailed. The first instance, according to bankers close to the development, was when the lenders were about to ink a resolution plan that allowed them to take over 30% of Goyal's stake at Re 1 per share. The Supreme Court nullified the February 12 RBI circular, which prevented Goyal's share to be converted. Goyal is still the largest shareholder at 51%, while Etihad owns 24% in the airline.
Last month, Hindujas had come as a knight in shining armour to be a majority partner. But just when the bankers were to meet the potential investors in Dubai, the carrier was declared bankrupt in Amsterdam over the liability of Rs 150 crore to overseas lessors. Hindujas developed cold feet and left the fray.
Though bankers were burning the midnight oil and carrying out hectic parleys with potential investors to revive the airline, all the efforts turned futile.
"A meeting of lenders was held today to consider the way forward in respect of Jet. After due deliberations, lenders have decided to seek resolution under IBC since only a conditional bid was received and requirement of the investor for Sebi exemptions and resolution of all creditors is possible under IBC. Lenders, led by SBI, have been making efforts to find a resolution outside IBC, but in view of the above, they have decided to seek a resolution within the IBC process," a lender said.
"It was an inevitable step with no credible offers coming forth and lenders refusing to infuse any further capital. With SBI and other banks being financial creditors along with large sum of employee dues as against largely insignificant assets, the operational creditors will have to latch their hopes on to an insolvency resolution to realise their debt," said Vineet Naik, senior advocate, Bombay High Court.
The share was hammered to close Monday at Rs 68.30 on BSE, down 16.76% from its previous day's close.
‘Joy of Flying’ comes to an end
May 5, 1993 – Jet Airways starts operations
Dec 2004 – Co lists on BSE
Apr 2007 – Acquires Air Sahara and renames it JetLite
May 2009 – Launches low-cost brand, Jet Konnect
2010 – Had a passenger market share of 22.6%
Nov 2013 – Etihad Airways buys 24% in Jet
Jan 2019 – Delays payment to a consortium of Indian banks
Feb 8 – Airline grounds four aircraft on non-payment to lessors
Mar 25 – Founder Naresh Goyal steps down as chairman
Apr 3 – Jet forced to ground more than three-quarters of its fleet
Apr 16 – Jet forced to shut down
Jun 17 – Bankruptcy finalised