With operations halted, Jet Airways (India) Ltd has exposed itself to the possibility of service providers and workers dragging the beleaguered airline to bankruptcy tribunals over unpaid dues.

A revival of the carrier may also become difficult if an investor is not finalized within a week or two, according to bankruptcy experts.

Lenders led by the State Bank of India (SBI) have earlier said that they will not approach the National Company Law Tribunal (NCLT). However, operational creditors such as service providers and aircraft lessors, as well as workers, can potentially take Jet Airways to the bankruptcy tribunal.

A formal bankruptcy process will offer Jet Airways protection for some time from lenders taking over its assets for non-payment of dues but would delay resolution.

The share sale process for Jet would then have to be restarted under the supervision of the tribunal as part of a rescue plan to be designed by a resolution professional.

The experts said it could take up to three months for such a court-monitored share sale process to start after the case is admitted and claims assessed by the resolution professional. This may prove very detrimental to the airline as many employees may leave for other jobs, airport operators may re-assign slots to rival airlines, and lessors may take back the planes in favour of other airlines if the company’s operations remain suspended for more than a few weeks. Selling Jet Airways to an investor, therefore, is a more viable option.

“The process under the bankruptcy code is not a suitable proposition in such a scenario. It is ideal to finalize the investor within a week or a fortnight. It is always better to keep the company alive as a going concern than trying to recover (dues) through bankruptcy process," said Manoj Kumar, partner at law firm Corporate Professionals.

Some experts, however, said if Jet Airways or its lenders had filed for bankruptcy earlier, it would have ensured a going concern for the insolvency professional instead of a defunct one.

“It is still not too late. Lenders should consider filing an insolvency petition immediately, which will help in salvaging any further loss of value of the company," said Sumant Batra, managing partner of law firm Kesar Dass B. & Associates.

Etihad Airways, India’s National Investment and Infrastructure Fund, and private equity firms TPG Capital and Indigo Partners were shortlisted on Monday to place binding bids for the airline.

Jet informed the stock exchanges on Wednesday that it will await the share sale process led by State Bank of India and the consortium of lenders. Lenders are not ready to infuse more funds before an investor brings in fresh capital. A delay in reviving the company could also impair Jet’s brand value and alienate its customer base.

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