VCC: Hinduja Group loses interest in Jet Airways but two suitors still in fray

16 January 2020: UK-based Hinduja Group did not submit its interest for Jet Airways Ltd by the Wednesday deadline, a lender that is part of the airline’s committee of creditors told VCCircle, locking shares of the airline in the lower circuit band of 5% at Rs 47.75 on the BSE on Thursday.

On the brighter side, South America-based Synergy Group and New Delhi-headquartered asset reconstruction company Prudent ARC Ltd have put in their expressions of interest, the lender said.

Now, the binding bids have to be submitted by February 15.

In December, the committee of creditors called for a fresh round of expressions of interest, the decision coming after the National Company Law Tribunal (NCLT) approved extending the period for Jet’s insolvency resolution by 90 days.

The NCLT had also directed the creditors to expedite their decision on seeking fresh bids after two new undisclosed investors had shown interest in the grounded airline. By then, Synergy Group was the sole known potential bidder for Jet.

A senior executive at State Bank of India, leader of the 26-member banks’ consortium to Jet, is not too optimistic of the resolution plans so far. “We are yet to see the financial capability and strength of Prudent ARC and Synergy Group,” the person said.

Another SBI official said lenders were hopeful about Hinduja Group submitting an expression of interest but were disappointed that it opted out.

Foreign bidders will have to seek local partners as Indian regulations allow foreign companies to hold only 49% stake in airlines. Synergy is yet to find its partner under the resolution plan.

Moreover, Prudent ARC could also be rejected by lenders as the bidding entity needs to have minimum Rs 2,000 crore (around $282 million) worth of assets under management.

The Mint newspaper had last year reported that Hinduja Group was keen to buy Jet but wanted itself to be indemnified from the airline’s legal liabilities.

The airline’s debt stands at over Rs 8,230 crore (about $1.16 billion) while the total liability under the Insolvency and Bankruptcy Code (IBC) to employees, suppliers and other clients is over Rs 6,400 crore (over $900 million).

Once the second-largest airline in the country, Jet was grounded on April 18 last year after which the NCLT initiated insolvency proceedings in June on SBI’s plea.

In August, Jet’s insolvency resolution professional received three expressions of interest — from Volcan Investment, which is billionaire Anil Agarwal’s family trust; Panama-based investor Avantulo Group; and Russian fund Treasury RA Creator.

Volcan withdrew a day later and Avantulo wasn’t shortlisted for the next round of bidding, leaving Treasury RA Creator as the only selected entity.

After the initial August deadline, Brazil-headquartered Synergy Group, which owns a majority stake in Colombian carrier Avianca Holdings, showed interest in Jet. The group, controlled by Bolivia-born Germán Efromovich, is engaged in aviation, energy and telecom.

Jet was founded by Naresh Goyal, who is being investigated by government authorities for alleged diversion of funds. It has accumulated losses of more than Rs 13,000 crore ($1.83 billion).

VC Circle reported

TI: Etihad skips Jet Airways bid

11 August 2019: The lenders of Jet Airways have received only three bids for sale of the grounded airline’s stake, with equity partner Etihad Airways not submitting a bid on the last day of the extended bidding process on Saturday.

Etihad Airways holds a 24 per cent stake in Jet Airways.

Sources told PTI that the banks received expressions of interest (EoIs) from three entities, of which two are financial players and another is a player in the global aviation space.

Saturday was the last day for submitting EoIs, after the time was extended for a week on August 3.

“Three bids have been received… but Etihad Airways did not submit bids this time around,” a bank source said.

Industry sources said the Hinduja group, which had shown interest earlier, also did not turn up this time.

Panama-based fund Avantulo Group is one of the three entities which have submitted EoIs, said another source.

The three EoIs will be reviewed by resolution professional Ashish Chhawchharia to ascertain their eligibility.

Late last month, the resolution professional had floated EoIs for selling stake in the airline that stopped flying mid-April.

The SBI, the lead banker to the airline, has approved Rs 10 crore interim funding and other banks are also in the process of approving the same, bankers had said.

The lenders had on June 17 decided to take the airline, which stopped flying on April 17, to the NCLT as they could not find a buyer.

Early July, the resolution professional had said he had received claims worth over Rs 25,500 crore as of July 4, including over Rs 200 crore from founder Naresh Goyal, which was rejected.

State Bank has made a claim of Rs 1,644 crore, including cash credit inclusive of interest, term loans and bank guarantees.

Yes Bank has claimed Rs 1,084 crore, followed by PNB’s Rs 963 crore and IDBI Bank’s Rs 594 crore. 

The Telegraph India reported

MC: SBI moves intervention plea against HDFC claim on Jet Airways’ BKC property

24 July 2019: State Bank of India, the lead lender to the bankrupt Jet Airways, on July 24 moved an intervention application against mortgage lender HDFC’s plea claiming rights over a portion of the airline’s BKC property.

The National Company Law of Tribunal (NCLT) adjourned the matter for August 8.

On July 4, the mortgage lender HDFC had moved the NCLT seeking to keep the airline’s BKC property out of the bankruptcy process saying three floors of the BKC property are mortgaged with it as collateral for over Rs 400 crore loan.

Meanwhile, the tribunal approved Ashish Chhawchharia of Grant Thornton as the resolution professional for Jet Airways which stopped flying since April 17.

Chhawchharia, who got 81 percent votes of the committee of creditors, was the interim RP since June 20, when the airline was admitted for insolvency.

The liabilities and debt of the airline are over Rs 36,000 crore.

On July 18, the RP had said he received claims worth Rs 24,887 crore in 16,643 claims, including Rs 8,462 crore by financial creditors, against the company as of July 4.

Significantly, he rejected a claim of Rs 229 crore from JetAir, the privately held company of founder Naresh Goyal, which was the general sales agent of Jet Airways and the holding company the Goyals’s stake in the airline.

The lenders, who control 50 percent ownership of the airline, after failing to get a buyer, was forced to sent it for bankruptcy on June 17, and on the 20th of the month the Mumbai NCLT admitted the plea.

Last Saturday, the lenders in renewed bid to sell the remaining assets invited expression of interest from interested parties with a deadline of August 3.

Financial creditors, who also include banks, have made 37 claims worth Rs 10,231 crore as of July 4, he said. The list of financial creditors, whose claims have been admitted include 14 domestic banks and financial institutions, 12 foreign banks and eight lessors, the RP said.

State Bank has made a claim of Rs 1,644 crore, including cash credit inclusive of interest, term loans and bank guarantees issued but not invoked, it said, adding its claims worth Rs 19 crore were rejected. Private sector lender Yes Bank has claimed Rs 1,084 crore, followed by PNB’s Rs 963 crore and IDBI Bank’s Rs 594 crore.

Operational creditors excluding workmen and employees have made a claim of Rs 12,372 crore, with the entire amount being under verification, while the workmen and employees have made a claim of Rs 443 crore which is also under verification, Chhawchharia said.

Apart from this, authorised representatives of workmen and employees have made 11,965 claims of Rs 735 crore, he said, adding other creditors, including other financial creditors and operational creditors, have made 121 claims amounting to Rs 1,105 crore.

Moneycontrol 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

ET: Jet Airways audit shows diversion of funds, fraudulent billing

15 July 2019: A State Bank of India commissioned forensic audit of Jet Airways books has revealed misappropriation of funds relating to provision of loans and fraudulent billing for JP Miles, according to two people with direct knowledge of the matter.

The report also highlights that invoices raised were not verified leading to excess billing and fuel expenses were raised substantially for Jet even when they remained static for other airlines.

“Provision has been made for Rs 3,353-crore loan given to Jet Lite over four years. Board resolution, shareholder approval for making the provision was not made available to the auditors,” the forensic audit conducted by EY says. ET has seen a copy of the report. “Loans were given to Jet Lite despite Jet Airways recording losses in fiscal year 2015 and declining profit over the years,” the report added.

The government had recently ordered a probe into Jet Airways for alleged siphoning off funds and for financial irregularities. The MCA ordered the SFIO probe under Section 212 (1) C of the Companies Act, based on its inspection report. The report indicated “prima facie” that the company was involved in “malpractices, mismanagement through siphoning off funds… preferential and related party transactions, prejudicial to public interest.”

The forensic audit also says that invoices raised on Jet Privilege were not verified, resulting in excess billing of nearly 1crore during July-September 2015.

Monthly invoice of Rs 15 crore was accounted for by Jet Airways for commercial activities without relevant documents supporting them. The report also says that the company was billed Rs 140 crore fraudulent JP miles leading to a loss of Rs 46 crore. Multiple other discrepancies were noted in the miles accrued versus what the company reported.

“There has been a systematic effort to siphon money from the company. In the limited analysis conducted it is clear that multiple methods were used to take out funds from Jet Airways,” said a person aware of the development.

SBI did not respond to an ET query. An official spokesperson for EY India said, “We are bound by our client confidentiality obligations and are unable to comment.”

The Economic Times reported

FE: Jet Airways insolvency: NCLAT to hear Dutch court administrator’s appeal

13 July 2019: The National Company Law Appellate Tribunal (NCLAT) on Friday agreed to hear a petition filed by a Dutch court administrator in the Jet Airways insolvency case as it stayed parts of the Mumbai bench of the National Company Law Tribunal’s order that declared overseas bankruptcy proceedings null and void.

Jet is facing insolvency proceedings in the Netherlands as well, where it was declared bankrupt after it failed to pay two European creditors. Subsequently, a bankruptcy administrator was appointed by the Dutch court.

A three-member NCLAT bench headed by Justice SJ Mukhopadhyay said it will clarify the law on action to be taken when there are two insolvency petitions filed against the same company in two different countries.

At the proceedings, the Dutch administrator agreed not to sell the confiscated assets of the debt-ridden Jet Airways.

The NCLAT issued notice to the consortium of Jet Airways lenders and directed them to file their reply within two weeks.

It fixed August 21 as the next date of hearing.

The Dutch bankruptcy administrator could also “collate the claims of Offshore Creditors including financial creditors, operational creditors and other stakeholders” of Jet Airways and forward their details to the resolution professional (RP) of the defunct airline, the NCLAT said.

Last month, while admitting State Bank of India’s insolvency plea against Jet Airways, the Mumbai bench of the NCLT had rejected the Dutch administrator’s plea to recognise their proceedings.

The grounded airline owes more than Rs 8,500 crore to lenders. It also has a large debt by way of accumulated losses to the tune of Rs 13,000 crore, vendor dues of over Rs 10,000 crore and salary dues of over Rs 3,000 crore.

“First Respondent (SBI) may file a reply affidavit suggesting the procedure that may be followed in the facts and circumstances of the case, without any conflicting interest of stakeholders of both the countries,” said the NCLAT.

The appellate tribunal further said that “during the pendency of this Appeal, the Appellant Administrator (Dutch bankruptcy) and 2nd Respondent – ‘Interim Resolution Professional’ will cooperate with each other”.

“It will be open to the Appellant Administrator to collate the claims of Offshore Creditors including financial creditors, operational creditors and other stakeholders and forward their details to the RP for the purpose of preparing the Information Memorandum with the approval of the Committee of Creditors,” the bench said.

The NCLAT stayed a part of the order passed by the Mumbai bench of the NCLT, which had in June dismissed the Dutch administrator’s plea saying that offshore proceedings are not maintainable.

During the proceedings, the Dutch bankruptcy administrator also assured NCLAT that it would not sell or transfer Jet Airways’ seized properties in the Netherlands, which was the European hub of Jet Airways.

“Sumant Batra, counsel appearing on behalf of Appellant Administrator, assured that the Appellant Administrator will cooperate in the proceedings pending in India and will not sell, alienate, transfer, lease or create any third party interest on the offshore movable and immovable assets of the ‘Corporate Debtor’ [Jet Airways (India) Limited], which are or may be taken in his possession,” the NCLAT noted.

The NCLAT has also directed the RP of Jet Airways to “ensure that ‘Corporate Debtor’ remains a going concern and will take the assistance of the (suspended) Board of Directors, paid Director and the employees.”

“The person who is authorised to sign the bank cheques may issue cheques only after authorisation of the IRP. The bank accounts of the Corporate Debtor be allowed to be operated for the day-to-day functioning of the Company…,” it added.

The NCLAT’s direction came over the appeal filed by the Dutch bankruptcy administrator, challenging the order of the NCLT.

Jet Airways is facing insolvency proceedings in the Netherlands and was declared bankrupt in response to a complaint filed by two European creditors.

In April, H Esser Finance Company and Wallenborn Transport had filed a petition citing unpaid claims worth around Rs 280 crore.

Following this, a trustee in charge was appointed by the Dutch court and it had approached its Indian counterpart for access to the financials as well as assets of the airline.

One of the Jet Airways aircraft, parked in the Schiphol Airport in Amsterdam, has already been seized.

Jet Airways, which has not flown since April 18, is going through insolvency proceedings in India as well.

The Financial Express reported

LM: NCLT to next hear Jet Airways case on 23 July

5 July 2019: The Mumbai bench of the National Company Law Tribunal (NCLT) on Friday said that it will hear the insolvency case against Jet Airways (India) Ltd. and next progress report by the insolvency resolution professional (IRP), who have been approved by the court to oversee the insolvency proceedings of the airline, on 23 July.

The tribunal said it will issue notice to one of Jet Airways’ lessors and regulator Directorate General of Civil Aviation (DGCA) to appear before it on 19 July. The lessors had sought deregistration of a Boeing 777 aircraft belonging to the airline due to non-payment of dues.

The court-appointed IRP for Jet Airways, Ashish Chhawchharia of Grant Thornton India, through his counsel, asked the tribunal to stall deregistration of the Boeing 777 aircraft since the airline is under moratorium.

Jet Airways has not flown since 18 April due to funding woes. A consortium of 26 bankers led by State Bank had approached the NCLT to recover dues of over ₹8,500 crore from Jet Airways. The lenders have been trying to sell the airline as a going concern since the past five months, but failed due to many a reason.

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

The airline has been having negative net worth for long and has run a loss of over ₹13,000 crore in the past few year. Thus it has over ₹36,500 crore of dues and being a services company negligible assets to recover.

The Mumbai bench of the NCLT admitted Jet Airways on 20 June for bankruptcy proceedings under the Insolvency and Bankruptcy Code (IBC). The court also approved an insolvency resolution professional (IRP) to oversee the insolvency proceedings.

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

On 4 July, mortgage lender HDFC moved NCLT seeking to keep Jet Airways headquarters in the city out of the bankruptcy process. HDFC counsel told NCLT on Thursday that three floors of the building were mortgaged with the lender.

(With inputs from PTI)

The LiveMint reported