Ankit Jalan did not rule out legal options like approaching the Supreme Court to resolve the standoff.
The reinstatement of Jet’s employee salaries that JKC recently cut depends on the transfer of ownership to the consortium said Jalan, while denying it was a pressure tactic to speed up the process.
However, he denied any consideration about liquidation and expressed JKC’s commitment towards making Jet fly and said it hopes to assume Jet’s ownership in 2-3 months and start operations in three months thereafter.
That would be onerous given the consortium’s resolution plan, which includes settlement of dues to all creditors, approved in June last year by India’s bankruptcy court hasn’t moved towards implementation at all. Also stuck are the airline’s plans to buy or lease aircraft or sell existing aircraft to raise cash.
At the heart of it is an ongoing tussle with the consortium and Jet’s lenders on how much should be paid as dues. The pertinent issue is that of rentals accrued from Airbus A330 aircraft sub-leased to Air Serbia. JKC says it should come to the airline. The lenders have said it should go towards repayments to them.
“There are a few things where we have agreed to disagree and we are finding ways mutually on how to sort it out,” said Jalan.
The issue of the sub-leased planes “is one of them. But that is something which does not stop the implementation of the plan because it is a one-off item, which is not holding. The plan implementation is not dependent on that,” he said.
According to the resolution plan, the variable rentals and the fixed rent (after payment to financier Barclays Bank) “will be utilized by the corporate debtor (Jet) for working capital purposes.” ET has reviewed the cited portion of the plan.
On October 18 JKC appealed to the National Company Law Tribunal (NCLT) to allow the resolution plan to be implemented, said a person in the know. The next hearing in the bankruptcy court is on November 29.
Jalan didn’t rule out approaching the Supreme Court if the issues are not resolved.
“We are evaluating all options on that. First, of course, there are bilateral discussions, where you try to come to an agreement. And then you see how it leads up.”
JKC has maintained the total claim settlement amount is Rs 475 crore.
On October 21, the National Company Law Appellate Tribunal directed the consortium to pay gratuity and provident fund to the airline’s employees till the date of insolvency commencement in June 2019. The total claim is around Rs 275 crore.
The consortium says all additional claims that haven’t been factored in the approved resolution plan are to be settled from the cash balance of the airline of about Rs 50 crore and the remaining from the share of banks.
JKC has maintained it has fulfilled all conditions set out in the resolution plan.
“JKC has deposited Rs 150 crore as required under the resolution plan with the lenders, with the remaining amounts to be invested only after next steps of NCLT are fulfilled in terms of handover of the company to us,” it said in a recent statement.
“In May, we achieved the effective date. And now the next milestone date is a closing date, which is when the company becomes actively compliant, JKC invests their fund infusion, whatever they have to do in terms of equity infusion, the shares get issued through SEBI and the company is handed over (to JKC). So, when all that is done, and payments to the stakeholders as defined in the plan is made, the closing date is achieved. So, we’re just working through the steps to achieve that closing date. And we expect that will come in the next one or two months,” said Jalan, adding it would take 90 days to start operations once the company comes to the consortium.
Two key conditions precedent in the resolution plan, that of reinstatement of the suspended flight slots of Jet Airways and international traffic rights clearance have not been fully fulfilled.
“Yes, the court did not give it (the slots) when the approval happened. We honoured the court’s decision. We discussed internally and we made a strategy even if it’s not coming, let’s take a strategic call that we’ll get it along the way,” said Jalan.
“So today, if we were to start, today or two months down the line, we have the required slots for our start of operations,” he said.
The slot approvals that Jet has got are however preliminary. The final approval won’t come before a no objection certificate for importing aircraft and security clearances are presented to an airport.
JKC has temporarily cut the salaries of some employees of the airline by up to half and placed some others on leave without pay effective December 1.
“One also needs to understand that whenever there’s investment in a company, there are a lot of financial aspects that need to be taken care of. But no decision has been taken that will impact the long-term strategy of the company”
“It also comes down to the handover, the transfer of ownership. Of course, people are our biggest assets and they are going to make this a reality for us. So, all of this will be restored. Whatever will be done will be linked to this timeline,” he said.