The Supreme Court on Thursday ordered the liquidation of cash-strapped Jet Airways, saying that the resolution plan approved five years ago is no longer feasible for implementation.
A bench comprising Chief Justice of India D.Y. Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra allowed a plea from the airline’s lenders opposing the transfer of ownership to the Jalan Kalrock Consortium (JKC). The bench also invoked its extraordinary powers under Article 142 of the Constitution “to do complete justice” between the parties, ordering the immediate appointment of a liquidator.
The court further ordered the forfeiture of Rs 200 crore invested by JKC and directed the lenders to invoke the Rs 150 crore Performance Bank Guarantee (PBG).
The Committee of Creditors (CoC), led by the State Bank of India, argued in its plea that the proposed revival plan was not in the best interests of the lenders and questioned the National Company Law Appellate Tribunal (NCLAT) order upholding the resolution plan.
In January this year, the Supreme Court directed JKC, the successful resolution applicant for the cash-strapped airline, to deposit Rs 150 crore in an escrow account jointly held by the State Bank of India and JKC. It cautioned that legal consequences would follow if JKC failed to provide the bank guarantee.
The Supreme Court also asked NCLAT to decide by the end of March 2024 on the lenders’ plea challenging the transfer of Jet Airways’ ownership to JKC.
According to the court-approved resolution plan, the consortium had committed to an equity infusion of Rs 350 crore to acquire ownership of Jet Airways. A three-member NCLAT bench later allowed an adjustment of Rs 150 crore from the PBG toward this Rs 350 crore commitment. The tribunal also accepted the consortium’s undertaking to pay Rs 100 crore by August 31, 2023, and an additional Rs 100 crore by September 30, 2023.
Once one of India’s largest and most popular airlines, Jet Airways entered the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC) in June 2019 due to severe financial distress.
(IANS)