India's Jet Airways resolution plan totters due to disagreement with creditors -sources

Jet Airways (India)

28/11/2022 12:28

By Nupur Anand and Aditi Shah
       MUMBAI, Nov 28 (Reuters) - Creditors of India's Jet
Airways  JET.NS  and the company's new owners are deadlocked
over a resolution plan to pull the airline out of bankruptcy,
putting the carrier's future in limbo, according to sources. 
    Creditors may approach India's aviation ministry to seek
approval to liquidate Jet's assets if a resolution does not
emerge during a critical court hearing on Tuesday, said a senior
banker. 
        "There have been too many delays ... there are concerns
the resolution plan may fall apart so we are looking to see if
we can at least get something out of this deal via the
liquidation route," the banker, who has direct knowledge of the
matter, said.
        The resolution plan is binding upon all involved parties
and was approved by the bankruptcy court, a spokesperson for
Jet's new owners said in a statement.
    We are "working closely" with the erstwhile lenders of Jet
to implement this plan, and remain "fully committed" to getting
Jet Airways off the ground, it added. 
    State Bank of India, the lead lender in the consortium of
creditors, declined to comment. The court-appointed resolution
professional overseeing the case did not immediately respond to
an email request for comment.
    Once India's biggest private carrier, Jet stopped flying in
April 2019 after running out of cash and was taken to a
bankruptcy court by creditors who were owed about 180 billion
rupees ($2 billion).
    Last June, a restructuring plan was approved by the National
Company Law Tribunal (NCLT) and the airline was set to resume
operations by the first quarter of 2022 under its new owners - a
consortium including London-based Kalrock Capital and UAE-based
businessman Murari Lal Jalan.
    However, disagreements between the company's new owners and
lenders over the plan risks derailing Jet's recovery.
    Lenders believe Jet needs around 10 billion rupees of
capital to run its operations in full but it hasn't managed to
bring that amount to the table, the banking source said.
    "So far they have only shown that they have received 1.5
billion rupees worth of bank guarantees and around 200 million
of cash which is not adequate to run the operations," he added.
    Another source close to the airline, however, said Jet has
fulfilled all the prerequisites of the resolution plan and the
committee of creditors has also undertaken due diligence on the
Jalan-Kalrock consortium's ability to inject funds.
    The 10 billion rupees is to be injected into the carrier
over a period of two years with 2.7 billion to be paid more
immediately to banks and other creditors, the person added. 
    By not approving the resolution plan creditors are causing
unnecessary delays, the source close to Jet said.
    Bankers disagree.
    "The reason we are unable to trust the consortium (of Jet's
new owners) is because we think they are not fully invested in
the resolution plan," said a banker at another creditor bank. 
        "They don't seem to have much skin in the game, instead
they want banks to do all the work," he added.
 (Reporting by Nupur Anand in Mumbai and Aditi Shah in New
Delhi; Editing by Susan Fenton)
 ((Nupur.Anand@thomsonreuters.com; +9122 68414388;))