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BUSINESS

Jet Airways lenders decide to refer airline to

bankruptcy court
The fate of the airline, which shut down operations on April 17, 2019 after it ran out of cash,
will be decided as per the June 7 circular of the Reserve Bank of India (RBI). Jet Airways owes
over Rs 8,500 crore to lenders.
By ENS Economic Bureau | • Mumbai |
Published: June 18, 2019 12:08:52 am
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 Insolvency: NCLT to hear 3 pleas against Jet Airways today

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Jet Airways owes over Rs 8,500 crore to lenders.

Two months after Jet Airways shut down its operations, banks have decided to refer the airline
to the bankruptcy court —National Company Law Tribunal (NCLT) — for resolution under the
Insolvency and Bankruptcy code (IBC) after the bidding process failed to identify a suitable
white knight.
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The fate of the airline, which shut down operations on April 17, 2019 after it ran out of cash, will

2
be decided as per
NCLT defers the June
hearing 7 Airways
on Jet circular to
ofJune
the Reserve
20 Bank of India (RBI). Jet Airways owes over
Rs 8,500 crore to lenders.

Later, Former chairman of Jet Airways Naresh Goyal said, “I feel sad and deeply distressed
3
PM Modi’s flight avoids Pakistan airspace: Here’s what overflying curbs mean for the industry
mainly for our loyal employees who have waited months and were anxiously and hopefully
awaiting a positive outcome to the Bank Led Resolution Plan. I can only hope and pray that
even now a solution can emerge and Jet can y and ful l the needs not only of employees but
of air travellers who feel the absence of the Joy of Flying.”

A meeting of lenders was held today to consider the way forward in respect of Jet Airways.
After due deliberations, lenders have decided to seek resolution under IBC since only a
conditional bid was received and requirement of the investor for SEBI exemptions and
resolution of all creditors is possible under IBC,” the airline said.

“Lenders led by State Bank of India have been taking efforts to nd a resolution for Jet Airways
outside IBC but in view of the above, lenders have decided to seek a resolution within the IBC
process,” it said.

According to banking sources, the bankruptcy process is most suitable method as the bidding
process did not evoke a serious proposal from bidders. “Bidders wanted huge haircuts and an
investor for takeover of the airline. They also wanted exmeption from open offer under Sebi
rules. This may not be workable,” said an o cial. As per the IBC procedure, once NCLT takes up
the case, an Insolvency professional (IP) will be appointed who in turn will assess the
company’s nancial position and work out potential resolution plans, including liquidation or
identifying a suitable investor. If the airline goes for liquidation, banks are unlikely to get much
as there are not much tangible assets for loan recovery.

The RBI has changed its earlier norm of 100 per cent mandatory approval from creditors for
resolution plan and has now allowed approval of 75 per cent of creditors for the
resolution.There will be 20 per cent provisions if resolution is not implemented in 180 days
from the end of review period. Banks will have to make another 15 per cent provision 15 per
cent (total additional provisioning of 35 per cent) if resolution is not done in 365 days.

The airline which started defaulting ve months ago was looking for an investor to pump in
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fundsSTORIES
but failed to get any funding source. Etihad Airways, which holds arouond 24 per cent

1 Boeing chief admits ‘mistake’ in handling 737 Max jets’ warning-system problem
stake in the airline, refused to bring in funds. On March 25, as part of the bailout plan worked
out by the lenders, Naresh Goyal and his wife Anita Goyal stepped down from the board. The
bid from Etihad Airways disappointed the lenders with the Abu Dhabi-based airline putting in

2
stiff NCLT
conditions
defers including
hearing onwrite-off of to
Jet Airways debt,
Junebringing
20 in another investor and exemption from
open offer. While the Etihad offer has turned out to be another expression of interest without
making any binding offer, it refused to chip in with funds in March as its proposal for exemption
from open offer and other concessions did not work out.
3
PM Modi’s flight avoids Pakistan airspace: Here’s what overflying curbs mean for the industry
After the airline shut operations in April, lenders led by SBI opted for a bidding process to
identify an investor to take over the airline. SBI Capital Markets was entrusted with the job of
the bidding process which got three bids, including one from Etihad with almost the same
conditions that it stipulated in March. With the bidding process failing to identify a suitor,
lenders approached corporate houses with deep pockets, including the Hindujas.

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