Jet Airways sees a glimmer of hope in its revival efforts as an appellate tribunal instructs the bankrupt airline’s lenders to transfer ownership to the successful bidder, the Jalan-Karlock consortium, within a 90-day timeframe.
The National Company Law Appellate Tribunal, on Tuesday, upheld the resolution plan for Jet Airways, which has been grounded since 2019 due to accumulating debt and a liquidity crisis.
Earlier, in January 2023, the National Company Law Tribunal permitted the handover of Jet Airways’ ownership to the Jalan-Karlock consortium. However, the airline’s lenders contested this decision, citing alleged non-compliance by the consortium with the resolution plan.
In June 2021, the NCLT approved a resolution plan proposed by the Jalan-Kalrock consortium. This consortium comprises Murari Lal Jalan, a UAE-based non-resident Indian, and Florian Fritsch, who holds shares through his investment holding company Kalrock Capital Partners Ltd, Cayman.
The appellate tribunal has mandated the consortium to secure an air operator’s certificate as part of the handover process. Additionally, it has directed Jet’s lenders to establish security on three Dubai-based immovable properties provided by the Jalan-Karlock consortium within 30 days.
Subsequently, the lenders must adjust the security against a performance bank guarantee of ₹150 crore. The Jalan-Karlock consortium is required to fulfill its first tranche of ₹350 crore before assuming ownership of Jet Airways. The consortium has already raised ₹200 crore for this purpose.
In August, the NCLAT permitted the consortium to submit a ₹150-crore performance bank guarantee to meet its total obligation of ₹350 crore. However, this decision was challenged by Jet’s lenders in the Supreme Court, which overturned the appellate tribunal’s ruling in January.
Furthermore, the appellate tribunal has instructed the consortium to settle dues towards the airline’s employees, creditors, and other resolution process costs from the first tranche of ₹350 crore.
“We hope and trust that all parties will take steps to implement the resolution plan to ensure the success of the first Corporate Insolvency Resolution Process (CIRP) of the aviation company in the country,” remarked NCLAT chairperson Justice Ashok Bhushan.
The lenders are expected to challenge the NCLAT’s decision in the Supreme Court, alleging that the Jalan-Karlock consortium has failed to meet various conditions necessary for taking over Jet Airways. These include obtaining an air operator certificate, approval from the Directorate General of Civil Aviation, slot allotment, and international traffic rights.
Moreover, concerns have been raised about the consortium’s non-payment of dues amounting to ₹272 crore for provident fund and gratuity to workers, in violation of a previous NCLT order. Additionally, questions have been raised about the source of the ₹200 crore payment for Jet Airways, as the consortium’s cooperation with an investigation into the source of the funds has been lacking. This issue has been further complicated by investigations into fraud and money laundering offenses involving Florian Fritsch in Europe.
