India
End of runway for Jet: SC orders liquidation, Nixes revival plan – Times of India
The SC noted the gross violations of the scheme by JKC, comprising UAE-based NRI Murari Lal Jalan and Florian Fritsch, which holds shares in Jet Airways through its Cayman Islands-based investment holding company Kalrock Capital Partners, and exercised its rarely exercised omnibus powers under Article 142 of the Constitution to order the liquidation of the non-viable airline.
In a 169-page judgment that provided guidelines for future proceedings in the Insolvency and Bankruptcy Code (IBC) and streamlining the processes before the corporate law tribunals NCLT and NCLAT, the court accepted the arguments of Additional Solicitor General N Venkataraman and SBI counsel Sanjay Kapur to allow SBI led the consortium of lenders to withdraw the Rs 250 crore deposited by JKC as well as the bank guarantee of Rs 150 crore, to be forfeited.
No option but to order liquidation, says SC after no progress in Jet revival plan
Writing the judgment for the court, Justice Pardiwala said, “The amount of Rs 200 crore already collected by the SRA (successful resolution applicant in JKC) stands forfeited. Lenders/creditors are further allowed to withdraw the performance bank guarantee of Rs 150 crore provided by SRA. We order accordingly.”
The court said: “In the special and alarming circumstances discussed in this judgment and taking into account the fact that almost five years have elapsed since the Resolution Plan was duly approved by the NCLAT and no progress worthy of the name has been made, we no longer have any progress.” other option than to invoke our jurisdiction under Article 142 of the Constitution and order that Jet Airways be put into liquidation. NCLT, Mumbai, will now take appropriate steps for appointment of a receiver and all other necessary formalities for commencement of liquidation of Jet Airways. “
Blaming NCLAT for allowing JKC to adjust the performance bank guarantee of Rs 150 crore to meet the shortfall in deposit of the first tranche of Rs 350 crore, which had to be made good by May 22, 2022, the bank said for five years, the resolution plan remained in limbo during which period various contributions payable by Jet Airways, including airport charges, increased due to JKC’s debt. “The court must ensure that such debts cease to accrue at some point,” the report said.
The bank said while IBC was introduced to ensure survival of bankrupt entities, the same should not come at the expense of efficiency. “In scenarios like the current one, ‘timely liquidation’ is indeed preferable to an ‘endless resolution process’,” the report said. “Such a view will avoid harm to the interests of all creditors who have suffered damage through no fault of their own and will ensure the maximization of the value of the remaining assets,” the court said.
Dismissing the pleas of senior advocates Mukul Rohatgi and Gopal Sankaranarayanan, who appeared for JKC and blamed the SBI-led consortium for non-cooperation while seeking more time to fully pay the first tranche, the court said: “There No further extensions or adjustments can be granted to JKC in light of multiple opportunities already awarded.”
Terming the JKC case as an eye-opener for the IBC platform, Justice Pardiwala said: “Scrupulous adherence to the code, along with behavioral and ethical discipline, is especially required from the key participants of the IBC who are at its core in its design, i.e. the adjudicating authorities, corporate debtors, resolution professionals, committee of creditors, potential and successful SRAs, approved valuers and liquidators.”
