The Jalan-Kalrock consortium (JKC), the successful bidder for bankrupt Jet Airways, sought additional time before the National Company Law Appellate Tribunal (NCLAT) on Friday to pay Rs 350 crore to the airline’s lenders.
The date for the payment was earlier set for August 31, but JKC has now sought an extension.
The appellate tribunal instructed JKC to file an application, stating the revised schedule of the payment within 24 hours, and posted the matter for August 21.
Senior advocate Ravishankar Prasad, who appeared for JKC, informed the court that the consortium would deposit Rs 100 crore by August 21 and another Rs 100 crore by the end of September.
Since it has already pledged a bank guarantee of Rs 150 crore, this could be invoked by the lenders.
JKC also assured the tribunal of its commitment to resuming airline operations.
On the other side, additional solicitor general N Venkatraman, representing the lenders, including State Bank of India (SBI), countered that the infusion of Rs 350 crore is merely the first step towards payment of dues.
He added that after this initial payment, three more tranches of money are to be paid to the lenders, with the final step being the transfer of equity shares.
Challenging JKC’s argument, Venkatraman stated that the bank guarantee of Rs 150 crore cannot be considered a part of the Rs 350-crore payment, as it was executed for a different segment of the resolution plan.
On May 26, the NCLAT had granted JKC 107 days to pay the lenders’ share.
“The SRA (successful resolution applicant) is ready and willing to infuse the first tranche of Rs 175 crore, and to demonstrate the bonafide of the SRA, it shall infuse Rs 50 crore within 30 days and the rest within the allowed time,” noted the order.
The court directed that, until this time (107 days, until August 30), the bank guarantee of Rs 150 crore should not be invoked by SBI.
JKC was earlier allocated 180 days, from November 16, 2022, to May 15, 2023, to pay the dues to the lenders.
The court observed, “After considering the facts and sequence of events in the present case, we are of the view that the SRA is entitled to exclusion of the period from November 16, 2022, till March 3, 2023, when this tribunal in the present appeal passed an order declining the interim relief as prayed by the lenders.”
This means that JKC has obtained an extension of over three months to deposit dues to the lenders since 107 days were excluded from the period of 180 days.
NCLAT issued the order on JKC’s application to prevent SBI from invoking the guarantee. The public sector lender had told the tribunal in an earlier hearing that JKC had not paid dues that were due on May 15.
JKC informed the court that on May 13, it received a letter from SBI, requesting the infusion of amounts referred to in the letter. SBI's letter further detailed the identified bank account and warned that if the payment obligations were not met by May 15, lenders might exercise their rights and remedies under law, including the invocation of the performance bank guarantee.
The court noted that lenders should, instead of invoking the performance bank guarantee, take steps to aid the implementation of the Resolution Plan and achieve its objective. “The Resolution Plan has been approved with the intent and purpose to revive the corporate debtor (Jet Airways),” the court added.
Jet's air operator certificate (AOC), revalidated by India’s aviation regulator on May 20 of the previous year, expired on May 19, hinting that the airline is unlikely to commence commercial flights in the near future. By May of last year, JKC had deposited Rs 150 crore with the lenders as a performance bank guarantee (PBG).
The National Company Law Tribunal (NCLT) last December directed lenders to hand over Jet Airways to the consortium. It asked the consortium to submit Rs 175 crore — as agreed under the insolvency resolution plan — with the lenders by May 14 this year to initiate the ownership transfer process.
According to the resolution plan, JKC needed to deposit a PBG of Rs 150 crore with the lenders in two tranches: the first of Rs 47.5 crore upon approval of the resolution plan by the committee of creditors, and the second tranche of Rs 102.5 crore on the "effective date" when all conditions precedent were fulfilled.
A refundable earnest deposit of Rs 15 crore was made to the lenders in July 2020 when JKC submitted its resolution plan. The first performance bank guarantee tranche of Rs 47.5 crore was deposited in October 2020 upon the committee of creditors approving the resolution plan. The remaining sum of Rs 87.5 crore was deposited in the second PBG tranche on May 20 last year, termed the “effective date,” when all conditions were met.