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Jet lenders to stick to resolution plan despite SC quashes RBI circular
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Jet lenders to stick to resolution plan despite SC quashes RBI circular

Agency News

Extending hope to Jet Airways, the lenders of the crisis-ridden airlines on Thursday said they intend to pursue the bank-led resolution plan for the Jet Airways under the present legal and regulatory framework.

The crisis of Jet Airways further intensified after the Supreme Court's decision to annul a February 12, 2018 Reserve Bank of India (RBI) circular on bad debts. The judgement was seen as a major setback for the resolution process. Following the Supreme Court judgement more Jet Airways flights were grounded and Indian Oil Corporation had stopped fuel supply to Jet Airways. On Wednesday evening, the airline informed employees that salaries for March will be delayed. Salaries are pending since January.

The consortium of lenders led by the State Bank of India (SBI) met in New Delhi on Thursday to take stock of the current situation of the company. In a statement issued on late Thursday evening, the consortium said: "The lenders intend to pursue the bank-Led resolution plan for sale of stake in the company in a time-bound manner under the present legal and regulatory framework and intend to invite expressions of interest."

"This will be invited on April 6, 2019 and will need to be submitted by April 9. The Lenders are cognizant that the outcome of the efforts of the lenders will depend on the interest shown by the parties on sale of stake in the company."

As per the lenders' statement, all efforts will be made for the stake sale and other options may be considered by them should these efforts not result in an acceptable outcome.

The lenders did not divulge any information about the present funding needs of the airline.

The first step of the plan was to give Jet's lenders a controlling 50.1 per cent stake in the airline for a value of Rs.1. This was based on a circular by the Reserve Bank of India on February 12 that overhauled debt restructuring rules for companies that have defaulted on loans. But legal experts said that the verdict of Supreme Court the validity of the action planned by the banks will be under scanner. The move can also be challenged in court. The validity of the transfer of title (here shares) done by banks under aforesaid circular can also be legally challenged. Therefore the verdict may compel banks to take corrective action to transfer valid titles to an interested buyer.

It is learnt that Banks have reassessed the Jet Airways situation in the light of the Supreme Court judgement. Banks are also said to have taken legal view on the issue. Jet Airways' lenders led by State Bank of India are said to have shortlisted potential investors including TPG Capital. Other international players such as Qatar Airways and American carrier Delta are also in the fray to have a stake of Jet Airways. Meanwhile, Adani group denies rumours of talks with Jet Airways.

Jet Airway's former Chairman Naresh Goyal has said he has cooperated fully and facilitated the bank-led resolution programme for the company. On March 25, Goyal had stepped down from the board of the airline and ceded majority control to the SBI-led consortium. Under the debt resolution plan, the lenders would inject up to Rs 1,500 crore working capital into the airline and convert their debt into equity, to revive the airline and then sell their stake in it.

The airline owes over Rs 8,000 crore to lenders, led by the State Bank of India (SBI).