As six months of efforts to save one of the country’s leading airlines, Jet Airways, failed, the lenders have now decided to take it to the bankruptcy court, which will decide the future course of action.
The lenders met on Monday in a last-ditch effort to save the Naresh Goyal-owned airline, but after much discussions they decided to seek a resolution under the Insolvency and Bankruptcy Code (IBC).
“A meeting of lenders was held to consider the way forward in respect of Jet Airways. After due deliberations, lenders have decided to seek resolution under IBC since only a conditional bid was received and requirement of the investor for SEBI exemptions and resolution of all creditors is possible under IBC,” the lenders, led by State Bank of India, said in a statement.
Jet Airways’ total dues to the banks are about ₹8,000 crore.
“Lenders have been taking efforts to find a resolution for Jet Airways outside the IBC, but in view of the above, they have decided to seek a resolution within the IBC process,” the statement said.
According to bankers, the idea behind attempts to resolve the issue outside the bankruptcy court after the airline defaulted, was to preserve the value. Banks had prepared a resolution plan and invited bids from prospective buyers for the troubled airline but had not received any binding offer. Only one conditional bid was received from Etihad — the national carrier of UAE which owns 24% in Jet.
However, civil aviation industry experts questioned the genuine intention of banks to save the airline and alleged they were more interested in recovering the money.
“The decision is too late to recover anything from Jet Airways. The lenders have followed the bureaucratic procedure so that nobody can question their decisions and the losses they would incur. They showed no urgency to revive Jet Airways and were more interested in recovering their money rather than salvaging the airline. Finally it were the lenders who in fact pushed Jet Airways into oblivion,” said Jitender Bhargava, former executive director, Air India.
SBI chairman Rajnish Kumar said the bank had taken ‘disproportionate steps’ to keep Jet flying as the lender had just ₹1600 crore exposure which translates into 7 bps in terms of gross non-performing assets.