The lenders of Jet Airways may soon favour resolution outside the insolvency law framework if the ongoing bidding process for stake sale in the embattled airline does not bear fruit, reports suggest. Jet Airways’ consortium of lenders is reportedly creating a separate course of action if things do not go as planned with the bidding process.
State Bank of India, leader of the seven-member consortium of domestic banks that have extended loans to Jet Airways, has started the bidding process for stake sale in the airline. While banks are hopeful of a successful bidding process, they are also looking at options in case the stake sale fails to take off, news agency PTI reported.
It is reported that Etihad Airways, TPG Capital, Indigo Partners, and National Investment and Infrastructure Fund (NIIF) have shown interest in buying stake in Jet Airways. The details of initial bidders are expected to be cleared on May 10.
However, if the bidding process fails, Jet Airways’ lenders may choose a resolution outside the Insolvency and Bankruptcy Code (IBC) framework, the PTI report said. In the plan for resolution, recovery on the basis of existing security and tangible assets would be a preferred option, it further added.
As per IBC norms, the resolution process can start only after getting the approval of National Company Law Tribunal (NCLT). The resolution under this framework is market-linked and time-bound. The banks might prefer resolution outside the NCLT, though, as it would help them realise better value from the aircraft and other tangible assets owned by the debt-laden Jet Airways.
Currently, they are waiting for completion of the bidding process, the lenders are also exploring options to raise funds from the carrier’s available assets, including utilising Jet Airways’ 16 remaining planes. Air India and SpiceJet have evinced interest in leasing Jet’s grounded aircraft. The aviation ministry is also setting up to allocate Jet’s vacant slots to other airlines.
Drowned in debt of more than Rs 8,500 crore, Jet Airways has suspended operations temporarily after lenders decided against extending emergency funds for its survival.
