FE/IE: Dutch court threatens to sell Jet Airways’ confiscated assets

22 August 2019: The administrator of a Netherlands court, which is pursuing insolvency of grounded Jet Airways, on Wednesday threatened to sell off the confiscated assets of the debt-laden carrier because of non-cooperation by the committee of creditors (CoC).

A three-member bench of the National Company Law Appellate Tribunal (NCLAT) headed by Justice SJ Mukhopadhaya has sought the lenders’ response on whether they are ready to pay fees and bear costs incurred by the Dutch court administrator, Rocco Mulder.

The NCLAT said it would consider similar treatment for creditors of foreign countries as financial creditors and could allow cost of insolvency resolution process at overseas location to be borne in India. The tribunal will further hear the case on September 4.

Representing Mulder, advocate Sumant Batra told the National Company Law Appellate Tribunal (NCLAT) that the lenders are yet to decide on their claims.

“I will have to withdraw the undertaking for not disposing of the seized assets since there is no response from the CoC on my demands,” Batra said.

The administrator undertook before the NCLAT on July 11 not to sell Jet’s assets till the pendency of the case. He had challenged the NCLT, Mumbai, decision to not consider the insolvency proceedings currently underway in the European nation.

Staying the NCLT order, the appellate tribunal had said it will clarify law on the course of action when two insolvency proceedings are moved against the same company in different countries.

Jet, which terminated all operations on April 17, is facing insolvency proceedings in the Netherlands as well, where it was declared bankrupt after failing to pay two European creditors with dues of around Rs 280 crore.

The Dutch court had seized one of Jet’s Boeing 777 aircraft that was parked in the Schiphol airport in Amsterdam where Jet had a regional office.

The NCLT Mumbai on June 20 admitted the insolvency petition filed by SBI against Jet which owes unpaid liabilities of around Rs 25,000 crore in the form of bank loans, unpaid salaries, vender dues and lease rentals. It appointed Grant Thornton’s Ashish Chhawchharia the interim RP with instructions to complete the resolution process in 90 days as the matter is of national importance.

Since then, Jet’s equity partner Etihad Airways and Anil Agarwal, executive chairman, Vedanta Resources, have backed out of the resolution process. —FE

The Indian Express/ The Financial Express reported

FE: Jet Airways revival: Anil Agarwal’s family trust, two foreign funds bid for debt-ridden carrier

11 August 2019: Beleaguered airline Jet Airways has received expressed of interest (EoI) from three companies out of which one happens to be Volcan Investments — the family trust of Vedanta’s Chairman Anil Agarwal while the other two bidders are foreign funds — Panama-based investment firm Avantulo Group and Russian Fund Treasury RA Creator, CNBC-TV18 reported citing multiple sources. However, Etihad Airways and Hinduja Group haven’t expressed their interest in bidding, sources indicated.

Volcan Investments, which count Anil Agarwal and family as its key stakeholders, will have Agarwal entering into the aviation market if it succeeds in bidding. The received EoIs will be examined by the resolution professional following which the final binding bids will be sought from the selected players that is likely to be submitted by September 12, as per an earlier note to exchanges by the resolution professional. “This process is being managed by the resolution professionals and at this time, out of respect for the process, Etihad Airways has no comment to make,” Etihad Airways spokesperson said in a statement to CNBC-TV18.

Jet Airways’ final resolution plan is likely to be submitted on September 27 to National Company Law Tribunal (NCLT) for approval, Financial Express had reported. The tribunal had started insolvency proceedings against Jet Airways on June 20 after an application by the State Bank of India. The NCLT sought faster resolution for the airline since the matter was considered to be of ‘national importance’. Judge VP Singh, in his order, had urged the resolution process to be over within 90 days.

The airline’s lenders had extended the EoI submission deadline by a week to August 10. Late last month, the resolution professional Ashish Chhawchharia had floated EoIs for selling stake in the airline. Jet Airways had to cease operations on April 17 as lenders refused giving emergency funds following which the ministry of civil aviation had to re-allocate the Jet’s slots to other airlines on a temporary basis till October.

The Financial Express reported

LM: Jet’s RP seeks lenders’ nod to liquidate assets to pay pending salaries

9 August 2019: The resolution professional (RP) overlooking the bankruptcy proceedings of grounded Jet Airways (India) Ltd on Thursday told the Mumbai bench of the National Company Law Tribunal (NCLT) that a request has been placed before the committee of creditors (CoC) to liquidate some assets to pay a part of the pending salaries to the airline’s employees.

According to resolution professional Ashish Chhawchharia, Jet Airways currently has about 7,400 employees on its payroll. During its peak, the airline had over 16,000 employees, including about 1,300 pilots.

“We have requested CoC’s permission to liquidate some assets to pay the salaries,” Chhawchharia said, adding that Jet Airways currently has no revenue from operations and, hence, paying employee salaries remains a concern.

Jet Airways, which had grounded its operations on 18 April, due to an acute fund crunch, is yet to pay salaries since January to a section of its staff, including pilots, engineers and general managers. The airline hasn’t paid salaries to the rest of its staff since March.

Employee associations of Jet Airways had earlier sought the court’s permission to release their salaries.

The NCLT bench on Thursday also heard the claims of Luckystar Pvt. Ltd, which owns Siroya Centre, the former headquarters of Jet Airways. Luckystar had earlier stated that the airline owes them dues since the airline’s rental lease for the building ended in April.

Chhawchharia informed the bench that Siroya Centre’s premises are not required anymore and the staff will be shifted to another property owned by the airline.

He also sought return of a portion of the deposit—with the deposit standing at about ₹10 crore—which was taken by Luckystar to rent out Siroya Centre to Jet Airways.

Chhawchharia said that Luckystar could deduct a part of its dues from the deposit and file claim for the remaining.

He added that this proposal will be put before the committee of creditors.

In case of a rejection from the committee of creditors, the matter will be heard in the court.

The tribunal, consisting of judges V.P. Singh and Rajesh Sharma, will hear the case again on 28 August.

On 20 June, the Mumbai bench of the National Company Law Tribunal admitted Jet Airways under the Insolvency and Bankruptcy Code (IBC).

A consortium of 26 banks led by the State Bank of India had approached the tribunal to recover dues of more than ₹8,500 crore.

Lenders have been trying to sell the beleaguered airline as a going concern for the past five months.

The LiveMint reported

FE: Jet Airways’ creditors pass all resolutions

7 August 2019: The committee of creditors (CoC) of Jet Airways on Tuesday passed all resolutions, including the evaluation matrix for assessment of resolution applicants and request for resolution plan, the resolution professional (RP) of the airline said in an exchange filing.

The evaluation matrix has an array of parameters which will help the CoC decide the ideal resolution applicant. So far, the RP has received at least two expressions of interest on August 3, which was the initial deadline for submitting EoIs.

FE earlier reported that the EoI submission deadline had been extended till August 10 to give more time to Etihad Airways.

The RP held the second meeting of the CoC on August 1 to vote on the evaluation matrix and request-for-proposal for resolution plans for the defunct airline. The CoC had also discussed interim funding to pay salary dues of Jet Airways employees. However, banks were reluctant to consider the same.

Last month, the National Company Law Tribunal (NCLT) directed the resolution professional of Jet Airways to discuss concerns over payment of salaries with the CoC, citing necessity of ensuring payment for ‘survival of employees’.

On June 20, the NCLT initiated insolvency proceedings against the airline, following an application moved by the State Bank of India. In its order, the NCLT sought a speedy resolution for Jet Airways as it was considered a matter of “national importance.” While passing the order, Judge VP Singh urged that the resolution process should be completed within 90 days.

Jet Airways halted operations on April 17 after lenders refused to provide emergency funding. Since then, the ministry of civil aviation has re-allocated the Jet’s slots to other airlines on a temporary basis till October.

The Financial Express reported

DNA: Etihad’s bid extension plea rekindles Jet Airways revival hopes

5 August 2019: This may be the last-ditch effort to rescue Jet Airways.

Etihad Airways, the joint venture partner with a 24% per cent stake in the beleaguered airline, has requested the creditors to give them more time to submit expression of interest (EoI) in the bankruptcy court.

“It was after Etihad Airways, one of the Jet’s largest shareholders, put in a request that the committee of creditors (CoC), which had met on Friday, gave an unconditional nod to extend the deadline for submitting the EoI,” said a banker who attended the meeting.

THE LAST ATTEMPT

• If there are no credible bidders, then the airline will have to proceed for liquidation  

• On June 20, NCLT admitted Jet Airways under IBC after lenders moved the court

• Rs 8,500 crore – Jet Airways owes to lenders  

• over Rs 10,000 crore it has to pay to its vendors  

• Rs 3,000 crore – Dues of its employees  

• Rs 13,000 crore – loss the airline has incurred in the last few years

Bidders now have time till August 10 to submit their bid.

“If there are no credible bidders, then the airline will have to proceed for liquidation,” said the banker.

“We are hoping that Etihad will come with a credible plan which can be implemented,” he added.

Jet Airways, which is now admitted in the Mumbai Bench of the National Company Law Tribunal (NCLT), is waiting to see if there are any credible bidders to fly it out of the financial mess.

On June 20, the Mumbai bench admitted Jet Airways under Insolvency and Bankruptcy Code (IBC) after a consortium of 26 lenders, led by State Bank of India (SBI), referred it to the bankruptcy court. The airline was grounded on April 17 as it ran out of cash. Jet owes over Rs 8,500 crore to lenders, over Rs 10,000 crore to its vendors, a majority being the aircraft lessors, and over Rs 3,000 crore to its employees, who have not been paid since March. The airline is having negative net worth for a long time, and has run a loss of over Rs 13,000 crore in the past few years.

In late June, the resolution professional Ashish Chhawchharia had floated EoIs for selling stake in the airline. The deadline for receipt of EoIs was kept at August 3.

In April this year, the Hindujas had come as a knight in shining armour to be a majority partner. But just when the bankers were to meet the potential investors in Dubai to discuss the takeover, a court in Amsterdam declared the airline bankrupt over the liability of Rs 150 crore. Fearing other liabilities, Hindujas backed out.

“This is to bring to the attention of all interested resolution applicants that the revised deadline for submission stands at 4 pm (India time) on 10 August, 2019,” said Ashish Chhawchharia, Jet Airways’ resolution professional in a note on Saturday.

“The proposed extension is to ensure the objectives of the IBC are achieved and we are able to maximise the value of the assets of the corporate debtor and achieve a better outcome for all stakeholders in this fast-track process,” the note said.

OPINION

‘RESOLVE THE CASE EARLY’

The expectation is that some bidder will come and take over Jet. But the bidder has to meet the terms of the lenders consortium and the employees. Even on June 20, when the NCLT had admitted the petition the court was of the view that the case is of national importance and the employees’ welfare is of prime importance. The court said that the case needs to be resolved in three months’ rather than the usual time of six months. There is a big demand for an airline like Jet Airways. There is a void in the lucrative sectors like Mumbai-London or Delhi-London.

Vineet Naik, senior advocate, Bombay High Court

The DNA reported

LM: Four potential bidders show early interest in troubled Jet Airways

1 August 2019: As many as four potential bidders have evinced interest in Jet Airways (India) Ltd, a person with direct knowledge of the matter said, though talks for a potential bid are still in early stages.

SBI Capital Markets, which is advising the lenders in the process of finding new investors for the grounded airline, has reached out to as many as 20 potential investors, the person said, requesting anonymity.

“Among these, four parties have shown initial interest to bid for Jet Airways,” the person cited above said on condition of anonymity.

The airline’s committee of creditors (CoC) met on Thursday to discuss issues related to its insolvency proceedings. The lenders decided that they would extend the deadline for bids if the airline failed to attract suitors by Saturday.

State Bank of India (SBI), which leads the lenders’ consortium for Jet Airways, has sanctioned ₹10 crore as a part of the approved interim funding of $10 million (about ₹69 crore) for the airline, which was decided by the lenders earlier in July. “Other banks are expected to follow suit and sanction their part of the funding in the coming days,” the person added.

Besides maintaining Jet Airways’ planes and other assets, the interim funding will also be used to hire people on contract to verify various creditor claims.

The lenders, however, have reservations about releasing a month’s salary for Jet Airways’ staff as sought by several worker unions, said another person aware of the matter.

Jet Airways, which grounded its operations in April, due to an acute fund crunch, is yet to pay salaries since January to a section of its staff such as pilots, engineers and general managers. The airline hasn’t paid salaries to the rest of its staff since March.

On 20 June, the Mumbai bench of the National Company Law Tribunal (NCLT) admitted Jet Airways under the Insolvency and Bankruptcy Code (IBC) after lenders referred it to the bankruptcy court.

The group of 26 banks, led by SBI, have approached the tribunal to recover dues of more than ₹8,500 crore. The lenders have been trying to sell Jet Airways for the past five months without success.

The LiveMint reported

ET: Lenders’ group allows Jet to raise up to Rs 70 crore

20 July 2019: The committee of creditors (CoC) to Jet Airways approved raising interim loans of up to Rs 70 crore to keep the grounded airline alive for three months. Bankers also approved the contours of a fresh bidding process for the carrier, fresh initial bids for which would be sought from potential investors Saturday.

The funds will be used to maintain aircraft and also pay some vendors to keep some critical services like IT systems alive, said a person close to the development.

The lenders also confirmed the appointment of Grant Thornton’s Ashish Chhawchharia, an interim resolution professional appointed by India’s bankruptcy court, as the resolution professional for the airline.

The court last month admitted an insolvency plea from Jet’s top lender State Bank of India, appointed Chhawchharia, and directed fast-tracking of the insolvency process.

“The model timeline to float expressions of interest is 70-75 days. It has been fasttracked to 30 days,” said a person close to the development.

Before Jet landed in bankruptcy court, its lenders had carried out a bidding process but failed to get a single decisive bid for the airline.

“The bidding criteria have now been simplified. The potential investor has to have a net worth of Rs 1,000 crore or assets under management of Rs 1,000 crore and investible funds worth Rs 1,000 crore. Many other requirements, such as five years of experience for a potential airline investor, have been removed,” said a person in the know.

Potential bidders have 15 days to respond to the initial bids. The RP plans to shortlist them in another 15 days.

The Economic Times reported

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

MC: Race for Jet Airways: TPG Capital-led consortium, Apollo Global Management in fray

17 July 2019: A TPG Capital-led consortium is evaluating a potential bid for Jet Airways under the IBC (Insolvency and Bankruptcy Code), multiple sources with knowledge of the matter told Moneycontrol.

US private equity firm Apollo Global Management, which specialises in distressed firms, is also keen to strike an alliance with other suitors to bid for the debt-ridden airline. The firm, which has $280 bn of assets under management, has reached out to the Jet employees consortium in this regard, sources added.

Another source told Moneycontrol that a lot hinges on the lenders making  JPPL a party to the bidding process.

“TPG Capital is interested in Jet Privilege Private Limited (JPPL), which has better financials compared to Jet Airways, has seen a spike in membership and has shown profits in the past. But the only hurdle is JPPL is an independent entity is not a party to the current insolvency proceedings. The SBI-led lenders’ consortium needs to take a crucial call on whether JPPL can be made a party to the bidding process,” said a second source.

Jet Privilege Private Limited ( JPPL) is the frequent flyer loyalty programme of Jet. It was incorporated in 2012 as a wholly-owned unit of Jet Airways but was separated as an independent entity in 2014 after Etihad Airways purchased a 50.1% stake for $150 million. The remaining stake is held by Jet Airways. On Point Loyalty, a global management consultancy focused on airline loyalty programmes, had valued Jet Privilege at $1.131 billion (about Rs 7,300 crore) last year, based on the average rupee exchange rate in November.

“Apollo Global Management met the Jet Airways employees consortium recently. They are value investors and see a good opportunity in Jet Airways,” said a third source.

The lenders of Jet concluded their first CoC ( Committee of Creditors ) on July 16th, 2019 and are expected to invite EOIs ( expressions of interest ) by the end of the week The deadline for submission of EOI’s by potential suitors is likely to end in the first week of August. Ashish Chhawchharia of Grant Thornton was picked earlier by the SBI-led consortium as the resolution professional for Jet Airways.

Moneycontrol was the first to report on June 29 that a Hinduja Group-Etihad Airways consortium gearing up for an IBC bid for Jet Airways and the Tata Group and Qatar Airways in an exploratory mode for the same. Later, Tata SIA Airlines chairman Bhaskar Bhatt was quoted as follows: “With demand evidently remaining unfulfilled, we like other airlines have sought to get more aircraft into our fleet, including those grounded at present. Acquiring (Jet’s) Boeing fleet makes our otherwise A320 Airbus fleet asymmetric but it will at least service the gap even if temporarily,” indicating that the conglomerate’s interest may be limited to only some of the airlines’ assets.

Moneycontrol had also reported earlier on June 28 that the employee consortium had joined hands with London-based AdiAgro Aviation to bid for 75 percent in the airline through the IBC process. AdiGro Aviation Founder Sanjay Viswanathan said the consortium will bid for 75 percent stake, of which the London-based firm will take 49 percent, and the rest will be with the employees’ consortium. There is a 49 percent cap on FDI in the aviation sector.

After failed negotiations earlier with multiple suitors, the SBI-led consortium decided to take Jet Airways to the bankruptcy court on June 17 and on June 20, the National Company Law Tribunal (NCLT) admitted the insolvency petition. The tribunal also directed the interim resolution professional to submit fortnightly status reports on the account and try and complete the resolution process in three months citing “national importance”.  Apart from the debts owed to banks, Jet also owes vendors, lessors and salaries to its employees. In total, its financial obligations amount to Rs 25,000 crore.

In response to mailed queries from Moneycontrol,  TPG Capital declined to comment. A spokesperson for AION Capital, a joint venture of Apollo Global Management & ICICI Ventures also declined to comment.

As reported on Moneycontrol

LM: Creditors’ panel to vote on $10 mn interim fund for Jet tomorrow

17 July 2019: The committee of creditors (CoC) of Jet Airways will vote on Thursday on whether to pump in $10 million into the airline as interim funding, said a person aware of the development.

This, along with other resolutions, was discussed at the first CoC meeting of Jet Airways on Tuesday. The other resolutions included calling for bids and admission of claims by creditors.

“We will seek proposals from investors in the coming weeks and investors who had shown interest in the airline before it was referred to NCLT will have to send a fresh proposal,” the person mentioned above said on condition of anonymity.

The advertisements for these will be published soon, he said.

The Mumbai bench of the National Company Law Tribunal (NCLT) on 20 June admitted Jet Airways under the Insolvency and Bankruptcy Code (IBC) after lenders referred it to the bankruptcy tribunal.

Jet Airways has not flown since 18 April because of funding woes.

A consortium of 26 bankers led by the State Bank of India had approached the tribunal to recover dues of more than ₹8,500 crore. The lenders have been trying to sell the beleaguered airline as a going concern for the past five months.

Apart from banks, the airline also owes more than ₹10,000 crore to hundreds of vendors, primarily aircraft lessors, and over ₹3,000 crore to its employees who have not been paid since March.

The airline has had negative net worth for long and has run a loss of more than ₹13,000 crore in the past few years. Its total liabilities amount to over ₹15,000 crore.

The NCLT will hear the insolvency case and the progress report by the insolvency resolution professional (IRP) on 23 July.

The tribunal has ordered the IRP to complete the IBC process in three months, though the law allows six months, saying “the matter is of national importance”.

The LiveMint reported