Once India’s biggest private carrier, Jet Airways stopped flying in April after running out of cash. With no more investors in hand, lenders to Jet Airways have decided to file for bankruptcy.
“Lenders have decided to seek resolution under IBC (Insolvency and Bankruptcy Code, 2016) since only a conditional bid was received and requirement of the investor for Sebi exemptions and resolution of all creditors is possible under IBC,” stated by State Bank of India
- The one-time premier airline was grounded on April 17 citing temporary grounding because of the severe cash crunch.
- With a debt of more than Rs 8,000 crore, it never flew again, leaving more than 15,000 employees stranded and jobless.
- The company is going through the rough water with airplanes getting seized and top of that there is no functional board to take decisions.
- Naresh Goyal was made to step down as the chairman of the board earlier this year as part of the resolution plan
- The last two remaining independent directors Ashok Chawla and Sharad Sharma too stepped down.
- The Jet lenders met for a crucial meeting and have decided to move the National Company Law Tribunal (NCLT) to seek a resolution under the Insolvency and Bankruptcy Code (IBC).
This resolution will allow Jet’s lenders, led by State Bank of India, to sell the company as a whole or sell its assets piecemeal to maximize recovery for creditors and bring to end weeks of uncertainty over the airline’s future.
Hinduja Group was keen to invest in buying a stake in Jet Airways but decided to halt negotiations, while Etihad Airways of Abu Dhabi put on hold a plan to add more investments in the Mumbai-based airline.
No angel for Jet to fly again
The Hindujas and Etihad were the last options for Jet. With Hindujas there was no formal proposal while Etihad, the Abu Dhabi airline which partnered Goyal in Jet balked to invest more.
With no investor, there is no way to pay off loans to the US Exim Bank and get back the planes. Due to these reasons, lenders have decided that IBC is the only way to go. This route also gives bidders some leeway and is a court-administered process.
The fate of Jet is sealed in this scenario
Jet Airways was once India’s 2nd largest airline after Indigo. With the bad money debt, there was still a hope that it will revive soon. Seeing the scenario, where it’s going to declare bankruptcy, it’s certain to say, the fate of Jet Airways nears to an end.