Jet Airways gets second wind: NCLAT upholds handover to Jalan-Karlock consortium

The National Company Law Appellate Tribunal on Tuesday also upheld the resolution plan for Jet Airways, which has been grounded since 2019 amid mounting debt and a liquidity crisis.

The National Company Law Tribunal had in January 2023 allowed the handover of Jet Airways’ ownership to the Jalan-Karlock consortium. The airline’s lenders, however, had challenged this alleging non-compliance by JKC with the resolution plan.

The NCLT had on 22 June, 2021 approved a resolution plan submitted by the Jalan-Kalrock consortium. The consortium comprises Murari Lal Jalan, a UAE-based non-resident Indian holding shares in Jet Airways in his personal capacity, and Florian Fritsch, who holds shares through his investment holding company Kalrock Capital Partners Ltd, Cayman.

The appellate tribunal has asked the consortium to obtain an air operator’s certificate as part of the handover process. 

It has also directed Jet’s lenders to create security on three Dubai-situated immovable properties offered by JKC within 30 days. 

Following this, the lenders would have to adjust the security against a performance bank of ₹150 crore, from which JKC will be required to complete its first tranche of ₹350 crore as a condition precedent to taking ownership of Jet Airways. 

According to the appellate tribunal, JKC has already raised ₹200 crore for the first tranche.

The NCLAT had in August allowed JKC to submit a ₹150-crore performance bank guarantee to fulfill its total obligation of ₹350 crore for completing the pre-conditions of the resolution plan.

Jet’s lenders challenged this in the Supreme Court, which in January set aside the appellate tribunal’s order.

The appellate tribunal has also asked JKC to pay dues towards the airline’s workmen, employees, creditors, and other costs of the resolution process from the first tranche of ₹350 crore.

“We hope and trust that all parties will take steps to implement the resolution plan to make the first Corporate Insolvency Resolution Process (CIRP) of the aviation company in the country successful,” NCLAT chairperson Justice Ashok Bhushan said while pronouncing the order. 

The Supreme Court had in January asked the appellate tribunal to dispose of all appeals and decide on the ownership of Jet Airways by the end of March. 

The lenders are expected to challenge the NCLAT order in the Supreme Court.

They had alleged that JKC had not fulfilled various conditions necessary to take over Jet Airways, such as obtaining an air operator certificate or any approval from the Directorate General of Civil Aviation, slot allotment, and international traffic rights. 

Moreover, JKC had not paid dues amounting to ₹272 crores for provident fund and gratuity to workers, violating a previous NCLT order, the lenders had alleged.

They had also said that public funds amounting to ₹400 crore had already been wasted, and daily payments of ₹25 crore were being made to the airport for parking purposes. 

The lenders had also raised concerns about the source of the ₹200 crore payment for Jet Airways. They stated that JKC was not cooperating with an investigation to determine the source of the money, after the second party in the consortium, Florian Fritsch, was investigated for fraud and money laundering offenses in Europe.

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Published: 12 Mar 2024, 05:42 PM IST