Jet lenders question source of money received from Jalan-Kalrock Consortium

Jet Airways stopped flying in April 2019. AFP PHOTO/Sajjad HUSSAIN
Jet Airways stopped flying in April 2019. AFP PHOTO/Sajjad HUSSAIN


  • Lenders say funds should come from JKC’s books, but consortium did not disclose source

New Delhi: The consortium of lenders to bankrupt airline Jet Airways, led by the State Bank of India has questioned the source of the money paid by the Jalan-Kalrock Consortium (JKC) to settle its dues in a plea before the National Company Law Appellate Tribunal (NCLAT) on Wednesday.

The move is set to throw a spanner in the works of Jet Airways’ revival plan. The new owners intend to restart the airline’s turnaround process by 2024.

The lenders also filed a fresh plea at the Mumbai bench of National Company Law Tribunal (NCLT), asking the airline to reveal the source of the funds paid by JKC.

They claimed the money was from ‘unknown sources,’ and JKC did not disclose the source of the funds. According to the resolution plan, the funds should come from JKC’s books and must be a legitimate source.

The NCLAT has asked the lenders to file their contention in a reply before the next date of hearing. The tribunal will hear the matter on 12 October.

On 29 September, a JKC-led consortium said they had fulfilled the financial commitment of 350 crore and its new promoters are determined to resume operations in 2024. “Further announcements regarding the launch date of Jet Airways will be made in the coming weeks," it had said. JKC had paid the first instalment on 31 August.

Former Jet promoter Naresh Goyal was brought for questioning by the Enforcement Directorate (ED) and arrested on 1 September.

On the other hand, JKC informed the NCLT that after clearing the payments to lenders, it will now initiate the process of alloting shares and complete the transfer of ownership of the airline.

According to the payment schedules approved by the NCLAT on 28 August, JKC was required to pay 200 crore to its lenders, besides dues of 350 crore on 30 September. The NCLT also said 150 crore will be encashed from the performance bank guarantee.

On many occasions the lenders have flagged flaws with JKC’s proposal. On 5 July, the Committee of Creditors had told the Supreme Court that it might be more prudent to wind up Jet, considering that their dues were not cleared and funds were not infused to restart operations. Lenders infused nearly 400 crore into the debt-laden airline, including settling airport dues.

According to the Mumbai bench’s January order, the effective date of the resolution plan was 16 November, and the JKC consortium had six months to clear the payments to lenders.

On 22 June 2021, the NCLT had approved the resolution plan submitted by JKC for Jet Airways. JKC comprises UAE-based non-resident Indian Murari Lal Jalan, who will pick up shares in Jet Airways in his personal capacity, and Florian Fritsch, who will hold shares via his investment holding firm Kalrock Capital Partners Ltd.

Jet Airways was grounded in April 2019 after running into financial difficulties. However, the ownership transfer has been hanging fire amid continuing differences between its lenders and the consortium.

However, refuting allegations by the lenders hinting at illegal source of funds JKC’s lawyers argued that the lenders did not show intent of transferring ownership of Jet to JKC despite the consortium executing all its obligation under court-approved resolution plan.

The counsel also said JKC provided evidence of all fund transfers complying with the resolution plan to the NCLAT.

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