Jet Airways lenders tell Supreme Court winning consortium hasn’t met any of the takeover terms

The lenders of Jet Airways informed the Supreme Court that the Jalan-Kalrock Consortium (JKC) has not released the full first tranche of a  ₹350-crore deposit—a key condition for transferring the bankrupt airline’s ownership. 

The lenders, led by the State Bank of India, also stated that the consortium has not complied with any conditions necessary for ownership transfer, making a case for the bankruptcy resolution plan to be set aside, which could potentially result in Jet Airways’s liquidation.

Jet Airways, founded by Naresh Goyal, went bankrupt in April 2019 when it suspended all flight operations due to financial woes. 

The Jalan-Kalrock Consortium comprises Murari Lal Jalan, a UAE-based non-resident Indian, and Florian Fritsch, who holds shares in Jet Airways through his Cayman Islands-based investment holding company, Kalrock Capital Partners Ltd. The National Companies Law Tribunal approved the consortium’s resolution plan for Jet Airways on June 22, 2021.

At the Supreme Court on Thursday, Jet Airways’s lenders argued that JKC was in breach of a previous Supreme Court directive requiring the consortium to deposit ₹150 crore to complete the first tranche of ₹350 crore.

Jet Airways’s lenders also informed the Supreme Court that they had only received ₹200 crore out of the ₹4,783 crore promised to them as per the resolution plan, which is to be paid over 5 years, and that they were incurring losses of ₹22 crore monthly while maintaining the airline and its assets. Furthermore, they stated that Jet Airways owes around ₹7,500 crore to lenders.

“This is a case of gross abuse of the (Insolvency and Bankruptcy Code) process. This is a definite moment—enough is enough. The court must make it clear that the IBC is not for abuse but a genuine facilitator for takeovers. Operators like this cannot come and play with the courts,” stated additional solicitor general N. Venkataraman, representing Jet Airways’s lenders.

Also read | Mint Explainer: Complex legal battles hold Jet Airways’ return

‘Stalling the takeover’

The lenders reiterated that JKC had not fulfilled various preconditions necessary to take over Jet Airways, including obtain an air operator certificate (AOC), approval from the Directorate General of Civil Aviation, slot allotment, bilateral rights, and international traffic rights. Additionally, JKC has failed to pay dues amounting to about ₹272 crore for provident fund and gratuity to workers, they said.

The lenders added that JKC had not released three Dubai-based immovable properties offered as security for the ₹150 crore performance bank guarantee.

In response, JKC maintained its argument that the lenders were stalling its takeover of the airline. The consortium had announced in September last year that it had infused ₹350 crore equity into Jet Airways and fulfilled its financial commitment as per the court-approved resolution plan.

The Supreme Court will continue hearing the case on October 1.

The bench, led by Chief Justice D.Y. Chandrachud, was hearing the lenders’ plea against the National Company Law Appellate Tribunal’s ruling in March upholding the handover of Jet Airways’s ownership to JKC by approving its resolution plan. 

A fraud investigation in Europe

The NCLAT had affirmed NCLT’s January 2023 order allowing the transfer of ownership and directed the lenders to complete the handover process within 90 days. This process includes transferring the shares of Jet Airways to JKC and obtaining an air operator’s certificate. 

The NCLAT also instructed the lenders to create security on the three Dubai-based properties within 30 days. Upon the creation of this security, the lenders were to adjust the ₹150 crore performance bank guarantee, with JKC required to complete payment of the first tranche of ₹350 crore as a condition precedent to ownership. 

The appellate tribunal noted that JKC had already raised ₹200 crore out of the ₹350 crore.

However, lenders appealed NCLAT’s ruling in the Supreme Court, arguing that the January order mandated a cash deposit of ₹150 crore and set aside the earlier NCLAT ruling that permitted JKC to submit a bank guarantee to fulfill its obligations.

Previously, lenders also expressed concerns about the source of the ₹200 crore payment, stating that JKC was not cooperating with an investigation to determine the source, as directed by the NCLT, after consortium member Fritsch was investigated for fraud and money laundering offenses in Europe.

Also read | Arun Shourie was probably right on Jet Airways' Naresh Goyal