ET: Jet Airways’ resolution professional receives claims worth Rs 25,000 crore

19 July 2019: The resolution professional overseeing Jet Airways has received claims worth close to Rs 25,000 crore, and has so far accepted only about one third of the claims that came from financial creditors.

Grant Thornton’s Ashish Chhawchharia, who was appointed resolution professional (RP) for the grounded airline by the bankruptcy court last month, has received 16,643 claims from employees, financial institutions and operational creditors including Jet Privilege, the loyalty rewards company that Jet co-owns with Etihad Airways, and founder Naresh Goyal’s ticketing agency Jetair Private Ltd, according to the detailed list of claims put up on the the airline’s website by the RP.

The RP has accepted close to Rs 8,500 crore from financial institutions and is in the process of verifying claims worth Rs 15,000 crore.

He has rejected the rest. Chhawchharia will call for expressions of interest from potential bidders for the bankrupt airline on Saturday, a person in the know said. Bidders will have 15 days to respond.

Some potential bidders, including Hinduja Group and a venture formed by Jet’s employees and UK’s Adi Partners, have already met Chhawchharia, sources said.

The National Company Law Tribunal (NCLT) had last month admitted Jet Airways for insolvency resolution on a plea from State Bank of India.

SBI has claimed a total amount of Rs 1,139 crore, which has been admitted by the RP along with 36 other claims from financial creditors including 12 Indian banks, about 12 foreign banks and institutions, five lessors and four other entities.

One of the unexpected claims came from Jet Privilege, in which Jet owns a 49% stake with its partner Etihad holding the rest.

The royalty rewards company has made a claim for Rs 951 crore as an operational creditor. There are also claims from JetFleet, which in its website says it has a strategic association with Goyal’s Jetair, an entity named Jet Airways LLC that has claimed Rs 426 crore, and Jetair itself whose Rs 230-crore claim on fixed deposits has already been rejected. The RP also received claims of Rs 444 crore from over 2,000 workmen and employees of the airline.

Rival Air India has claimed Rs 189 crore while its engineering services arm has claimed Rs 38 crore. SpiceJet has claimed Rs 6 crore while GoAir has claimed Rs 20 crore.

There is also a Rs 585-crore claim from the International Air Transport Association (IATA) while Jet’s partner Etihad has claimed Rs 1,043 crore in one segment and Rs 64 crore in another. The first claim hasn’t been admitted. Etihad owns 24% shares of Jet. Industry watchers don’t expect creditors to get more than a fraction of what they have claimed. The airline is left with a fleet of just 14 planes.

A majority of its prime flight slots at India’s busiest airports have been allotted to its peers.

The Economic Times reported

ET: Fate of Indian real estate hangs in balance as SC hears builders’ challenge to IBC

19 July 2019: The Supreme Court of India on Thursday heard the constitutional challenge filed by over 100 builders against the right provided to the homebuyers as ‘financial creditor’ under the section 7 of Insolvency and Bankruptcy Code.

The bench of justices Rohinton Fali Nariman, Sanjiv Khanna and Surya Kant took suo moto congizance and has directed the Additional Solicitor General (ASG) appearing for the government to provide a list of states where RERA authority, Appellate Tribunal and Adjudicating officer are not present.

The order comes after the advocates Aditya Parolia and Piyush Singh, representing over 300 home buyers, pointed out that the RERA act has still not been adopted or proper implementation has not taken place in most of the states.

“Many states have appointed government officers as temporary authorty,” said Parolia. The SC demanded a list of such states as well. The ASG will have to present this list to the court by Tuesday.

Pioneer Urban Land and Infrastructure filed a plea in the Supreme Court in January 2019, challenging the validity of section 5(8)(f) of the IBC2016, where homebuyers were given the right to be considered as financial creditors.

As many as 136 similar writs were filed by builders like Supertech, Parsvnath, BPTP, Ansal Hi-Tech Townships, Today Homes Noida, Ireo, SARE Shelters Projects, Wave MegaCity Centre, CHD Developers, Spaze Towers, Orris Infrastructure, AVP Buildtech, Three C Shelters, Emaar Hills Township, TDI Infrastructure, ATS Realty, among others.

All these writs were attached to the original plea of Pioneer Urban Land and Infrastructure and are being heard together.

According to the builders, home buyers must make their claim through RERA and consumer forums, and the amendment in IBC has only resulted in additional encumbrance upon them. They also say that the definition of ‘default’ occurring in such cases is not clear. The financial creditors can initiate the insolvency proceedings against a corporate debtor when it commits a ‘default’. In case of delay of a project the definition of ‘default’ becomes vague.

Also, according to builders, there have been cases where the delay has happened on the buyer’s end paying the instalments. They also dispute the ambiguity about treating home buyers as secured or unsecured creditors.

Hence, such cases when referred to insolvency forum turns into abuse of process of law and also sometimes lead to delay in project delivery.

In the previous hearing held on July 10, the ASG had said that there was no illegality in amendment brought by it in IBC. The centre had said that the law was amended to protect the interest of home buyers who had invested their money to purchase flats. The amendment helped in their representation in the Committee of Creditors under IBC.

The affidavit filed by the centre in the SC further said that the explanation was inserted under Section 5(8)(f), providing that the allottees under the real estate project are considered as financial creditors, was only for the purpose of abundant clarity.

The case will next be heard on July 23.

The Economic Times reported

FE: Essar Steel insolvency: Arcelor Mittal moves SC against NCLAT order

19 July 2019: ArcelorMittal, which was declared the highest bidder for debt-laden Essar Steel, on Thursday moved the Supreme Court against a part of the order of the National Company Law Appellate Tribunal (NCLAT) which had ruled that the profit of Rs 3,495 crore generated during the corporate insolvency resolution process cannot be given to it.

The appellate tribunal had held that the profit should be distributed among all the financial and operational creditors on a pro-rata basis of their claims.

The NCLAT had on July 4 said if ArcelorMittal did not pay the total dues to the creditors – financial creditors or operational creditors – “but pays lesser amount than the claim, then in such case, the profit should be distributed among all the creditors”.

It directed that “after the distribution of Rs 42,000 crore, if any amount is found to have been generated as profit during the CIRP after due verification by the auditors, it should be distributed among all the creditors… on a pro-rata basis of their claims subject to the fact that it should not exceed the admitted claim”.

Last week, State Bank of India-led committee of creditors of the insolvent firm had moved the Supreme Court against the NCLAT’s order that reduced their share of sale proceeds and also put financial creditors and operational creditors at par in the settlement of claims.

The petitions are coming up for hearing on July 22.

The Financial Express reported