NCLT sets 90-day deadline for Jet Airways bankruptcy resolution

Company News

The National Company Law Tribunal (NCLT) on Thursday admitted the insolvency petition moved by State Bank of India (SBI) — under section 7 of the Insolvency and Bankruptcy Code (IBC) — against Jet Airways, and instructed that the resolution process be wrapped up in 90 days as the matter is of national importance.
Typically, the corporate insolvency resolution process (CIRP) should be completed in 180 days, and an extra 90 days’ time is granted in case the process doesn’t conclude in the stipulated period. The interim resolution professional (RP) has been instructed to submit fortnightly progress reports on the CIRP process, with the first to be filed on July 5, the day of the next hearing.
The tribunal also declared a moratorium on recovery of dues from Jet, the country’s first aviation firm to be admitted for bankruptcy. Jet had over 120 planes, of which only about a dozen have not been de-registered by the civil aviation regulator. The rest of the planes had their leases terminated and many of them have been inducted by other airlines in India or abroad.
Also, on a day which saw the beleaguered airline being admitted under the insolvency process, Jet shares posted their highest single-day gain on the bourses on Thursday, rising 93 per cent on the BSE to end at Rs 64 after declining 75 per cent in the previous 10 sessions. Such a movement in share prices is highly unusual.Moreover, presiding judges V P Singh and Ravi Kumar Duraisamy did not take cognizance of the Dutch court order that had declared Jet bankrupt, given that cross-border insolvency is still not in place under the IBC and because the jurisdiction of the corporate debtor rests with the tribunal (as the company is listed in India).

 SBI, in its plea, said the airline had defaulted on working capital loans of up to Rs 970 crore. Jet had a working capital facility of Rs 505 crore. This account was overdrawn by around Rs 460 crore for 30 days.

Mumbai firm Darwin Group submits bid to invest in grounded Jet Airways

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Ajay Harinath Singh, a Mumbai-based resident who claims to run diverse businesses across 11 countries, has submitted an offer to invest in Jet Airways.

Singh’s Darwin Platform Group (DPG) is the third unsolicited bidder to stake a claim for revival of the grounded airline. Others include former flight steward-turned-entrepreneur Jason Unsworth and London-based investment firm Adi Partners.Representatives of DPG, including its Chief Executive Officer Rahul Ganpule met executives of SBI Capital Markets on Wednesday. The meeting took place a day after top-level exits at Jet, which is seen as a pointer to airline’s uncertain future.

Lenders had called for bids last month and among qualified parties, only Etihad Airways submitted a conditional investment offer. The Abu Dhabi airline has said anyone investing more than 5 per cent in Jet should have its approval. Lenders continue to seek investors to turn around the airline and are meeting those making unsolicited bids.A report on Moneycontrol.com said a Russian aviation professional named Oleg Evdokimov, too, has submitted his expertise to turn around Jet but he is not interested in picking up a stake.

While continuing to engage with unsolicited parties lenders are taking their offers with a pinch of salt. “Discussions are going on to ascertain their seriousness. We have asked them for documents and proofs of investible funds,” said a source from the banking industry.


 DPG representatives told SBI Capital Markets they could invest Rs 14,000 crore in the airline and sought details of the company’s assets, liabilities and litigation. DPG website says Singh is a native of Sultanpur (Uttar Pradesh), with a royal-cum-business background and can speak Dutch, French and Russian language, along with other Indian languages. Singh’s business interests span across various areas like finance, farming and film production.

Hinduja group keen on Jet Airways takeover; seeks Naresh Goyal's consent

Company News

The Hinduja group would be keen to take over Jet Airways, provided lenders agree to take a substantial haircut on their dues and founder Naresh Goyal gives his consent to the takeover. A top official of the group said it sees value in the airline, which is going through a crisis.

“We may look at the airline provided banks agree to take a haircut on debt. The high debt is unsustainable,” said a source close to the development. Jet Airways owes Rs 9,000 crore to banks and has defaulted to banks, suppliers and employees. Its operations have shut down due to lack of funds.
If both banks and Goyal agree, the group will start talks with Etihad, which had made a bid for the airline last week. Goyal owned 51 per cent stake in the airline of which 41 per cent stake is pledged with the lenders. “Goyal has run the airline like his own baby and we do not want to take any action unless he agrees,” the source said.

“Traffic from India is growing substantially and we think, in association with Etihad, we can turn around the airline,” the official said, adding that the group was contacted three days ago for a joint venture.

The airline industry in India has already witnessed similar meltdowns with SpiceJet making a spectacular turnaround after a similar situation. “The airline would need a professional management like other Hinduja group companies where the family members do not interfere in the day-to-day operations of any company,” said the source. Traffic from India is growing and there is a need for an another airline to meet the demand, he added.


The Hinduja group runs successful companies in India, including in commercial vehicle major Ashok Leyland, lubricants player Gulf Oil and has stake in IndusInd Bank. Jet Airways stock was down 4.18 per cent on Wednesday to close at Rs 123.7 a share.

Jet lenders make last push to find investors to pick up stake in airline

Company News

Etihad Airways’ conditional offer to be a minority stakeholder in Jet Airways has thrown lenders into a tizzy. With little signs of any investor willing to buy 76 per cent, the lenders’ consortium led by State Bank of India has now initiated a process to find investors who could hold small stakes along with Etihad.

The lenders are of the opinion that the ownership of Jet Airways can be divided between three entities, each holding 20 per cent, while Etihad could keep 24 per cent. If the lenders fail to find such investors in the next few days, the only option would be to take the airline to an NCLT-led insolvency process, a source in the know said.

Sources pegged the total investment required by Jet Airways to restart operations at Rs 5,950 crore. Etihad, in its offer, said it would be able to invest only Rs 1,700 crore and acquire only 24 per cent stake. “The total equity need has been assessed at Rs 5,950 crore, of which Rs 1,700 crore can come from Etihad.

“If another three investors can pick up 20 per cent each, a resolution can be possible. But I reiterate that the situation seems to be extremely difficult,” a senior bank executive said. SBI Caps has been told to reach out to prospective investors including companies which have submitted unsolicited bid, another source in a public sector bank pointed out.

“There are quite a few interested parties who have evinced interest to invest in the company. Etihad’s bid to acquire 24 per cent can form the basis for guidance and can be treated as some sort of a floor for other investors,” he said. However, the authenticity of the bids needs to be checked before taking a decision, sources close to the development said.


 “The situation looks to be extremely difficult with Etihad unwilling to relax its conditions.

Jet's luck has finally run out: What its collapse says about India

Company News

It looks like Jet Airways Ltd.’s luck has finally run out. India’s oldest privately owned airline is on the verge of shutting down all its flights -- it already has perhaps fewer than 10 aircraft active -- because it simply doesn’t have enough working capital. It’s more than a billion dollars in debt and has lost money for the last four quarters.

On one level, you could argue that this is a good sign for India: Its institutions are holding up. State-owned banks are Jet’s biggest creditors and they seem unwilling to throw more money at the airline without a clear revival plan. This is a big change from the past, when they kept supporting one of Jet’s rivals, the ill-fated Kingfisher Airlines Ltd., long after it seemed rational to do so.

News also broke a few days ago that Jet’s founder, Naresh Goyal, was no longer bidding for the banks’ stake in the airline, perhaps because other shareholders wouldn’t play along. Too often India cash-strapped companies have managed to get their debt restructured, with state-owned banks taking a haircut while the “promoters” who control crucial amounts of equity maintain control of the company. That is an unhealthy lack of accountability and we should all be glad it doesn’t seem to be happening in this case.


 Jet has 23,000 employees and a devoted fan base, yet isn’t an easy company to love. I say its luck has run out because in the past it consistently seemed to benefit from government intervention that drove many of its full-service competitors out of the market. It’s the only survivor from the first round of private Indian airlines that started flying in the 1990s -- and, in many Indian sectors, that usually means that you’ve managed the government much better than your peers have.In the end, however, the market wins out. If you are competing against low-cost airlines that still somehow provide equivalent service in economy class -- not to mention a full-service airline, Air India Ltd., that’s state-owned and can absorb whatever losses it wants -- you can’t dodge fate forever...Read More

Jet lenders plan to sell 75% stake, bidder's net worth should be Rs 1000 cr

Company News

Jet Airways India Ltd.’s lenders invited initial bids to buy as much as 75 percent of the debt-laden carrier, starting a process that will determine the future of India’s oldest surviving private airline.
Potential buyers must submit their interest by April 10, State Bank of India Ltd., the lead creditor, said in a document Monday. A strategic bidder should have a net worth of at least Rs 1,000 crore ($144 million) in the preceding financial year, or at least three years of experience in the airline business.

The airline is credited with successfully breaking the monopoly of state-run Air India Ltd. and was once India’s second-biggest carrier, but its fleet has dwindled to 26 planes from 124 as recently as January. Accumulated losses in nine of the past 11 years have caused Jet Airways to delay payments to banks, lessors and employees, while its founder Naresh Goyal was forced to cede control of the carrier.

Jet Airways, part-owned by Abu Dhabi’s Etihad Airways PJSC, needs Rs 8500 crore to get back on its feet after a fare war by budget airlines wiped out profits and it racked up debt of more than $1 billion.

The fate of Jet Airways is crucial to the legacy of Indian Prime Minister Narendra Modi as he faces an election that begins April 11 after holding power for the last five years. While he remains the favorite in the polls, his party has faced setbacks of late and he has been criticized for not living up to a key election promise to create 10 million new jobs a year. A collapse of Jet Airways, with 23,000 employees, could further dent his credentials.

Consortiums submitting bids should have no more than three members, with each holding a share of no less than 15 percent, according to Monday’s document.

 After qualified bidders are selected, they will be provided access to the company’s data and the bid document...Read More

Avolon seeks to de-register 2 planes leased to Jet, woes deepen for airline

Company News

Avolon, one of the world's biggest aircraft lessors, applied to de-register two planes it had placed with Jet Airways Ltd, making it the first lessor to do so on a non-consensual basis with the struggling Indian airline.

Two subsidiaries of Dublin-based Avolon applied to India's Directorate General of Civil Aviation (DGCA) to de-register two Boeing 737-800s, according to notices published on the regulator's website.

Avolon has terminated the leases on the planes and currently has five more aircraft placed with Jet, said sources who declined to be identified due to the sensitivity of the matter.A spokesman for Avolon declined comment on the matter.

The move by Avolon indicates an escalation of a crisis for Jet. The airline, now controlled by its lenders, has had to ground more than three-quarters of its fleet of 119 planes, many due to non-payment to lessors, leading to hundreds of flight cancellations.

With debt of more than $1 billion, Jet has struggled to pay lenders, suppliers, pilots and lessors for months and was on the brink of bankruptcy, but was bailed out last month by state-run banks.
The consortium of lenders temporarily took a majority stake in the company, and agreed to issue a loan of 15 billion rupees ($217 million) to meet Jet's obligations but the money has still not been released.


 The lenders said late on Thursday that they intend to push forward with their plan to rescue Jet, but offered no clarity on interim funding, leaving the future of the carrier hanging in the balance.Frustrated by the unpaid dues, Jet's lessors, including many of the world's biggest players such as GE Capital Aviation Services, Aercap Holdings and BOC Aviation have taken control of their planes, sources said.

Jet Airways fate hangs in balance over funding delays, depleting sales

Companies News

Jet Airways' fate hangs in balance with fast depleting sales and non-committal stance by Etihad Airways on fresh infusion of funds.

On Monday, the airline's founder chairman Naresh Goyal wrote to staff seeking more time to finalise a resolution plan given its complexities. Goyal's email said he is still in talks with lenders and Etihad, but aviation sources indicated that he is looking for a new investor to keep the company afloat.

On Tuesday morning, civil aviation minister Suresh Prabhu directed the department secretary to hold an emergency meeting on grounding of Jet's flights and asked for a status report.

The delay in fund infusion is leading to massive cancellations and employees are increasingly losing confidence in management commitments. Travel agents too are becoming apprehensive about the future of the airline and a few corporate houses have asked their employees to follow discretion while booking Jet tickets.Jet insiders say its truncated schedule of 200 flights each day is not sustainable to meet expenses.

Amit Kelkar, vice president of Jet Aircraft Maintenance Engineers Welfare Association, wrote to the civil aviation ministry on Tuesday, stating that with repeated payment defaults, members had lost confidence in the management. The letter also warned of safety risks, as engineers were not getting paid.

The National Aviators Guild which represents pilots is meeting this afternoon to decide its future course of action. Earlier this month, the union had written to labour minister Santosh Gangwar about pay delays.


 A section of employees however is still hopeful of a positive outcome over the course of the next few days...Read More