The Supreme Court of India has ordered the liquidation of Jet Airways, which is facing financial difficulties, stating that the resolution plan approved five years ago is no longer feasible. A bench led by Chief Justice D.Y. Chandrachud supported the lenders’ request against the ownership transfer of the airline to the Jalan Kalrock Consortium (JKC).
Utilizing its extraordinary powers under Article 142 of the Constitution, the court aimed to ensure justice for all parties involved and instructed the immediate appointment of a liquidator. It also mandated the forfeiture of Rs 200 crore contributed by JKC and authorized lenders to utilize a Rs 150 crore Performance Bank Guarantee (PBG).
The Committee of Creditors (CoC), headed by the State Bank of India, had argued in its petition to the Supreme Court that the proposed revival plan was not beneficial for the lenders and contested the National Company Law Appellate Tribunal (NCLAT) ruling that upheld the resolution plan.
Earlier in January, the Supreme Court had required JKC, the winning bidder in the insolvency resolution process for the airline, to deposit Rs 150 crore into an Escrow account managed by both the State Bank of India and JKC. The court warned of legal repercussions if JKC failed to provide the bank guarantee.
Additionally, the court directed the NCLAT to reach a decision by the end of March 2024 regarding the lenders’ challenge to JKC’s ownership of Jet Airways. According to the resolution plan approved by the court, the consortium was expected to inject Rs 350 crore in equity to take ownership of the airline. Prior agreements allowed for Rs 150 crore from the PBG to be applied towards the Rs 350 crore payment. The NCLAT also accepted commitments from the consortium to pay Rs 100 crore by the end of August last year and another Rs 100 crore by September 30, 2023.
Jet Airways, which had once been one of India’s leading airlines, entered the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC) in June 2019 due to severe financial issues.