Jet Airways will never start again. On Thursday 7 November, the Supreme Court ordered the liquidation of Jet Airways. Liquidation means seizing the assets of a company and using the proceeds from selling them to repay its debts and liabilities.
In this order, the court overturned the decision of the National Company Law Appellate Tribunal (NCLAT). NCLAT had in March ruled to hand over the ownership of Jet Airways to Jalan-Kalrock Consortium (JKC) under the resolution plan (to rescue the airline from crisis).
Let us tell you that due to the economic crisis, the operation of Jet Airways is closed since 2019. At that time, Airways had a loan of Rs 4783 crore from many banks. The maximum loan was given by State Bank of India. Banks had initiated bankruptcy proceedings after the airline went into loss. Under the resolution plan, JKC was to get the ownership rights. The banks had appealed against this in the Supreme Court.
Supreme Court said- decision in the interest of lenders and employees The Supreme Court in its judgment said that liquidation would be in the interest of its creditors and employees, as the Jalan-Kalrock consortium had failed to implement the resolution plan even after 5 years of approval. The court used its extraordinary powers under Article 142 of the Constitution to order liquidation of Jet Airways in view of the 'strange and worrying' situation.
Actually, according to the resolution plan, Jalan-Kalrock Consortium was to pay Rs 4783 crore. Rs 350 crore were to be given in the first installment, out of which the consortium was able to give only Rs 200 crore. A bench of Chief Justice DY Chandrachud, Justice JB Pardiwala and Justice Manoj Mishra has ordered NCLAT, Mumbai to appoint a liquidator.
What was the banks allegation?
- In the petition filed in the Supreme Court, many banks including SBI said that this consortium failed to fulfill the conditions set for the acquisition of the airline. Now the airline is not in a position to revive.
- The consortium had deposited only ₹200 crore out of the ₹350 crore under the resolution plan.
- JKC failed to meet other key obligations, including obtaining an air operator certificate and international authorisation.
- Due to the long delay in reviving Jet Airways, the airline was incurring a loss of ₹22 crore every month on maintenance of its assets. Additionally, Jet Airways owed approximately ₹7,500 crore to its creditors, further complicating the situation.
Joint company of Murari Lal Jalan and Kalrock Capital
JKC is a joint company of Murari Lal Jalan and Kalrock Capital. Jalan is a Dubai based businessman. Kalrock Capital Management Limited is a London based global firm working in the field of financial advisory and alternative asset management.
Naresh Goyal started Jet Airways In the early 1990s, ticketing agent-turned-entrepreneur Naresh Goyal gave people an alternative to Air India by starting Jet Airways India Limited. At one time Jet had a total of 120 planes and was one of the leading airlines.
When the company with the tag line 'The Joy of Flying' was at its peak, it used to operate 650 flights every day. When the company closed, it was left with only 16 planes. By March 2019, the company's loss had reached Rs 5,535.75 crore.
Graphics Source: VaskarAssets
