The lenders’ consortium, led by State Bank of India (SBI), which had been tasked with finding potential buyers or investors for India's debt-ridden Jet Airways, have given up on its
rescue effort after finding no buyer for Jet Airways.
The consortium on June 17 decided to take the Naresh Goyal-founded airline to the National Company Law Tribunal (NCLT) to seek a resolution under the Insolvency and Bankruptcy Code (IBC).
The tribunal has posted the matter for admission on June 20. The Jet Airways lenders’ fresh application is expected to be heard the same day.
In a statement, SBI said: “Lenders have decided to seek resolution under IBC since only a conditional bid was received and requirement of the investor for Sebi (Securities and Exchange Board of India) exemptions and resolution of all creditors is possible under IBC.’’
Etihad is still looking for potential solutions
The statement added that while the lenders were making efforts to find a resolution for Jet Airways outside the insolvency process, a decision has been taken now to seek a resolution within the IBC process due to investor requirements.
A Business Standard report quoted sources interpreting the SBI statement as saying that it was possible that Etihad Airways, a major shareholder in Jet Airways, might bid under the IBC process to get the grounded carrier at a cheap price.
Etihad had made a conditional offer to invest in Jet Airways as part of the resolution process that was being put together by the lenders. Etihad was not ready to strike a deal without an open offer exemption from Sebi.
Asked to comment about the development, a spokesperson of Etihad said: “Etihad Airways has worked consistently to find a solution which would enable Jet Airways to be reactivated as a viable entity. We will continue to constructively evaluate participation in potential solutions.”
It's over to the legal process from now on
Jet Airways founder, Naresh Goyal, who was forced to step down as the chairman of the board earlier this year as part of the resolution plan, was quoted by the Business Standard as saying that “I feel sad and deeply distressed mainly for our loyal employees who have waited months and were anxiously and hopefully awaiting a positive outcome to the bank-led resolution plan.” He added that “I can only hope and pray that even now a solution can emerge, and Jet can fly and fulfil the needs not only of employees but of air travellers.” However, a Jet official noted that “It’s over to the legal process from now on.”
A Dutch court last month already declared Jet Airways bankrupt and had seized a Boeing 777. In comments to the Business Standard, lawyer Sumant Batra pointed out that this could complicate the insolvency process in India and NCLT would have to consider if a resolution professional can be appointed in view of the proceedings in Netherlands. Others however maintain there will be no impact of the Dutch case on the NCLT process except that Indian court may not have a right on the airline's foreign assets.
No white knight in sight
In the last phase of the rescue process, only Etihad Airways and the Hinduja Group were discussing a possible solution with the lenders, but which never materialised. Etihad’s bid was non-binding in nature and Hinduja’s offer lacked commitment, a source said.
Grounded since April 17, lenders were increasingly finding it difficult to find an investor for Jet Airways with its accumulated debt of Rs 8,500 crore and total liabilities of over Rs 25,000 crore. The banks involved in the turnaround of what was once India’s second-largest airline have in the past stated that reversing the grounded carrier’s negative net worth and getting it back into the skies would be a big challenge for prospective investors.
An Economic Times report said that two operational creditors, Shaman Wheels Pvt Ltd and Gaggar Enterprises Pvt Ltd, have meanwhile filed two separate insolvency pleas against the airline in the Mumbai NCLT. The hearing on these petitions is likely on June 20 and insiders believe that these petitions will be most likely joined with the petition of the lenders’ consortium.
Nol van Fenema