NEW DELHI: Exactly two months after Jet Airways suspended its operations, the debt-ridden airline’s lenders, led by State Bank of India, has finally given up their hunt for investors and have decided to refer the carrier to National Company Law Tribunal (NCLT) for bankruptcy proceedings.
“After due deliberations, the lenders have decided to seek resolution under IBC (Insolvency and Bankruptcy Code) since only a conditional bid was received and requirement of the investor for SEBI exemptions and resolution of all creditors is possible (only) under IBC,” a statement by lenders said.
Two operational creditors, Shaman Wheels and Gaggar Enterprises, have already filed separate insolvency pleas against Jet in NCLT-Mumbai to recover their dues. The matter will be heard on June 20. Jet was grounded on April 17 after it failed to secure operational funding from creditors. The lenders, who had acquired controlling stakes in the airline, began a long but unfruitful exercise to bring in investors. While they received Expressions of Interest from a few bidders, only Jet’s Gulf-based partner Etihad Airways submitted a non-binding bid.
Ever since, lenders have knocked the doors of multiple potential investors, the prominent of them being UK-based Hinduja Group, to settle Jet’s accounts outside NCLT, as they feared little or no recovery of dues, which stands at Rs 8,500 crore. Jet’ has a total liability of Rs 15,000 crore, including unpaid salaries and vendors’ dues.
While Etihad’s Rs 1,500 crore offer that came with many conditions was “disappointing” for the lenders, Hinduja Group, after showing initial interest, decided to halt negotiations. Later, Etihad too pulled out its plan to add more money in the airline founded by Naresh Goyal.
During the two-month wait for an investor, Jet has lost its valuable possessions one by one. Around 100 of its planes have been deregistered; many of them are now operated by SpiceJet and some by Vistara. Jet’s slots at major airports were allocated to other airlines. Its lucrative international flying rights were given away to rival carriers, giving some of them a chance to expand to global routes. Many in the industry believe that this, and the terms set by lenders, must have discouraged potential investors.