• Factors that led to the issue:
2015 – Jet acquired Air sahara – with huge price – led to huge loses.
Competition from low budget airlines like Indigo, Go-air.
Rising fuel prices.
• Debt – ₹8,000 crore to lessors, suppliers, pilots and oil companies.
• Lenders were searching for prospective buyers.
• Denied ₹400 crore as emergency fund – later
it was jet grounded.
• A Resolution Plan: rehabilitation plan for a
Corporate Debtor (CD) going in insolvency.
Section 5 (26) of IBC 2016 – “Resolution plan means a plan proposed by resolution
applicant for insolvency resolution of the corporate debtor as a going concern in
accordance with Part II”
• Mandatory contents of the resolution plan:
Financial creditors and Operational creditors.
Financial creditors: relationship with the entity is a pure financial contract – loan or a debt security.
Operational creditors – liability from a transaction on operations.
• Committee of creditors (CoC) is set up – comprising of financial creditors.
Appoint a resolution personal/ professional.
• Resolution personal
Appointed by CoC
Presents a resolution plan to the CoC
CoC must approve a resolution plan.
Resolution process must be
completed within 180 days – may be extended by a period of up to 90 days after NCLT’s approval.
Jet Airways Resolution Plan.
• Mumbai Bench of the NCLT has approved it.
• Resolution plan from a consortium.
UAE-based businessman Murari Lal Jalan and U.K.- based Kalrock Capital. • Details
Total claims – ₹15,432 crore
Jalan-Kalrock consortium – to pay creditors & banks – ₹1,183 crore over a 5 period.
First tranche of ₹280 crore – paid in cash after 180 days of the new promoters taking ownership of the jet airline.
Second instalment of ₹195 crore – paid in next 730 days.
Balance – paid through a mix of cash, proceeds generated from the sale of assets and annual cash flows generated by airline.
Stock the distribution
Banks – 9.5%
Consortium – 89.79%
Employees – 0.5%
Public shareholding – 0.21% • Challenge – Getting the slots back for the jet airlines is going to be difficult and expensive.
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