Jet Airways’ creditors and the airline’s new owners are at loggerheads over a resolution plan to pull the company out of bankruptcy, putting the carrier's future in limbo, quoting sources news agency Reuters said. According to some sources, the creditors are likely to approach the aviation ministry to seek approval to liquidate Jet's assets if a resolution does not emerge during a critical court hearing on Tuesday.
"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, the source said.
Jet Airway’s 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 Reuter’s request for comment. The court-appointed resolution professional overseeing the case also did not immediately respond for comment.
Jet Airways, once India's biggest private airline, stopped operations in April 2019 after running out of cash and was taken to a bankruptcy court by creditors who were owed about Rs 18,000 crore ($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 relaunch.
According to lenders, Jet needs around Rs 1,000 crore 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 Rs 150 crore worth of bank guarantees and Rs 20 crore 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 Rs 1,000 crore is to be injected into the carrier over a period of two years with Rs 270 crore to be paid more immediately to banks and other creditors, the source added. By not approving the resolution plan creditors are causing unnecessary delays, the source close to Jet said.
The bankers, however, 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.