Jalan-Kalrock's plan for Jet Airways unworkable, lenders tell Supreme Court

The lenders have filed a challenge to the NCLAT order of May 26 which granted the Jalan-Kalrock consortium three-and-a-half months more to make payments

Lenders, led by the State Bank of India (SBI), told the Supreme Court (SC) on Monday that the Jalan-Kalrock consortium's approved resolution plan for Jet Airways has become “unviable” and “unworkable”. The banks have not received anything from the consortium nor has it infused funds into the airline to bring around its operations.

After the consortium's proposal to take over the bankrupt airline was approved by the National Company Law Tribunal (NCLT) on June 22, 2021, it has spent approximately Rs 400 crore of public money, including airport dues, Additional Solicitor General, N Venkataraman, representing the lenders, told the bench led by Chief Justice DY Chandrachud.

While the employees want their dues to be cleared, lenders want the consortium to deposit some money to prove bona fide. The Supreme Court sought responses from the Jalan-Kalrock consortium, and Ashish Chhawchharia, the representative of the monitoring committee of the airline, on the two appeals filed by the lenders and the Jet Aircraft Maintenance Engineers Welfare Association.

The lenders have filed a challenge to the National Company Law Appellate Tribunal (NCLAT)'s order of May 26 which granted the Jalan-Kalrock consortium three-and-a-half months more to make payments. The NCLAT had also asked the lenders not to invoke the consortium's Rs 150 crore bank guarantee (BG) that was submitted at the time of bidding, stating that banks should focus on reviving a company undergoing insolvency proceedings rather than penalising the successful bidder for lapses.

The committee of creditors have said that winding up or liquidation is the only way forward. To this, the spokesperson of JKC said, "Neither JKC nor the Supreme Court is inclined towards winding up or liquidation. The same was also instructed as a strict order given by the SC today to continue implementing the resolution plan. JKC will revive Jet Airways as per the approved resolution plan and without any modifications to it and is fully committed to doing so."

NCLT last December asked lenders to hand over Jet Airways to the consortium. It asked the consortium to submit Rs 185 crore -- as decided under the insolvency resolution plan -- with lenders by May 14 this year so that ownership transfer can begin. The lenders have not received this amount as yet.

As per the resolution plan, JKC was required to deposit with lenders a performance bank guarantee (PBG) of Rs 150 crore in two tranches: the first of Rs 47.5 crore when a committee of lenders approves the resolution plan and the second tranche of Rs 102.5 crore on "effective date" when all CPs (conditions precedent) were fulfilled.