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Cash-strapped Jet Airways had its wings further clipped on Monday, 17 June, as the airline’s lenders decided to send it for bankruptcy proceedings in a bid to recover their dues.
With the once premier airline going into bankruptcy exactly two months after it was grounded, founder Naresh Goyal, in a press statement on Tuesday said: “I can only hope and pray that even now a solution can emerge and Jet can fly and fulfil the needs not only of employees but of air travellers who feel the absence of the Joy of flying.”
Here is a lowdown on the latest development in the Jet saga and what might follow:
Now that Jet Airways’ case is with the NCLT, the tribunal will take all decisions pertaining to the resolution of its debts – overseeing both the process and its execution. So far, the SBI-led consortium was trying to attract potential buyers.
And, according to a Mint report, 'one or two parties' have indicated their interest in Jet Airways since it reached the bankruptcy court.
Jet owes Rs 8.74 crore to Shaman Wheels and Rs 53 lakh to Gaggar Enterprises.
Reportedly, Jet pilots' union National Aviator’s Guild is also planning to file a plea at the NCLT.
With the banks failing to reign in any buyer for Jet, they might be in for some relief as the NCLT has the power to order the liquidation of assets of the airline.
Here are some of the measures that the NCLT might undertake:
The NCLT has the power to appoint a professional who takes over the management of the company undergoing the insolvency resolution process. Notably, Jet Airways has experienced a lot of turbulence as far as exit of the senior management is concerned. The airline has been without a functional board as well.
The tribunal also has the authority to record all financial information of Jet Airways which can prove to be a major source for determining the nature of debt and default.
This aspect is important for those parties, apart from the banks, who have exposure to the airline's debts.
While Jet Airways’ debts to the banks stand at Rs 8,400 crore, the extent of the flyer's total liabilities vary in different estimates.
These liabilities include unpaid salaries, unpaid fuel bills, operational debts etc.
Banks and other creditors are pinning their hopes on the fact that the NCLT would allow the liquidation of Jet Airways’ assets.
Reports suggest that Etihad and Hinduja groups were interested in the bidding process but sought a 85 percent haircut of the debts, a demand that was unacceptable to the banks.
“Jet Airways doesn’t have many assets left as most of their aircraft were inducted on a sale and leaseback mechanism," said a foreign brokerage, as quoted by Mint.
"The properties owned by the airline are also mortgaged as security for loans," the brokerage further said.
Liquidation of the assets would also mean the end of the road for an airline that has been at the forefront of the aviation sector for 25 years – leaving close to 23,000 Jet employees without a job.
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