Jet Airways To Restart Coc Approves Revival Plan

Table of Contents

Introduction

18 months after it shut down and sixteen months after it became the first airline company to be admitted under insolvency and bankruptcy code (IBC),
Jet Airways is finally all set to make a comeback, albeit with a new owner – Kalrock Capital and Murari Lal Jalan.

The resolution plan of consortium of Kalrock Capital–Murari Lal Jalan
Has been approved by the committee of creditors as e-voting of the lenders concluded on Saturday.
UK-based Kalrock Capital UAE-based entrepreneur Murari Lal Jalan

“The e-voting concluded today, i.e October 17,2020 and the resolution plan submitted by Murari Lal Jalan and Florian Fritsch has been duly approved by the CoC under section 30 (4) of the code as the successful resolution plan”,
The resolution professional said in an exchange notification.
Sources said, the plan submitted by Kalrock consortium won by an overwhelming majority.
Jet Airways, once India’s largest airline, was promoted by Naresh Goyal, who held 51% stake, while Abu Dhabi-
based Etihad Airways had 24%.
Etihad, which was initially interested in taking over Jet then lost interest and offered to sell its entire stake to banks.
Etihad invested $379 million in Jet Airways back in 2013 at a price of Rs 754.74 per share.

As the committee of creditors have voted for Kalrock Capital led consortium to revive the airline, with a majority,
The resolution professional of Jet Airways will now have to get the plan approved by the National Company Law
Tribunal (NCLT).
Upon receiving the NCLT approval, they would need to apply to civil aviation ministry and corporate affairs ministry for their approvals, respectively.

Jet Airways slots at major airports and its traffic rights were awarded temporarily to other airlines.
Its operating permit is dormant and would need to be made active and licences of pilots and engineers would need to be renewed.
A civil ministry official said that slots and rights will not be an issue.
“Slots and rights will go back to pool and reallocated according to size and demand of airline. There are no problems with slots,”

Claims made by financial creditors, operational creditors, and employees have ballooned to over Rs 40,000 crore.
Financial creditors such as State Bank of India, Yes Bank, and others have claimed Rs 11,344 crore.
Operational creditors, including workmen and employees have claimed Rs 27,719 crore.
It is expected that lenders will take a fairly large haircut on their exposure.

While globally aviation companies have suffered due to Covid-19, it has also presented opportunities for new investors.
“A new airline would be able to negotiate better rates with aircraft manufacturers and suppliers.
Lease rates have declined.
Pilot availability too has eased and many could be ready to join at lower packages.”
Also in India the incumbent airlines are much weaker now and running high losses due to fall in passenger traffic.
With only two airlines (Air India and Vistara) offering a business class service, there could be opportunity to grab the market share in premium traffic.

Q) Which of the following statements regarding Insolvency and Bankruptcy Code, 2016 is correct?

IBC covers companies as well as individuals.
National Company Law Tribunal (NCLT) will be the adjudicating authority for companies and not for individuals.
One of the objectives of IBC is to promote entrepreneurship.