Insolvency proceedings initiated against Jet Airways; Ashish Chhawchharia appointed IRP

New Delhi: Insolvency proceedings have been initiated against debt-ridden Jet Airways, followed by the National Company Law Tribunal (NCLT) admitting an insolvency petition filed against it by SBI last week.

"Pursuant to an order dated June 20, 2019 of NCLT Mumbai Bench, Corporate Insolvency Resolution Process (CIRP) has been initiated for Jet Airways (India) as per the provisions of Insolvency and Bankruptcy Code, 2016," Jet Airways said in a regulatory filing Sunday.

Jet also informed in the BSE filing that Ashish Chhawchharia has been appointed as the  Interim Resolution Professional for the company.

“Upon initiation of CIRP, the powers of the Board of Directors of the company have been suspended and shall be exercised by the Interim Resolution Professional,” Jet added.

The NCLT bench comprising VP Singh and Ravikumar Duraisamy set a 90-day deadline to the IRP to conclude the resolution process, even though the bankruptcy law allows 180 days for the same.

“It is also important to the point out that this matter is of National Importance. The CorporateDebtor company has more than 20,000 employees, and its revival at the earliest by a viable Resolution Plan is essential. Therefore, the proceeding of this court cannot be stayed or withhold even for a single day based on the order passed by any foreign court, which is a nullity in the eye of law,” the NCLT bench comprising VP Singh and Ravikumar Duraisamy.

The bench also instructed the resolution professional to file fortnightly progress report and submit the first such report on July 5 when it will begin to hear the matter again.

A consortium of 26 bankers led by the SBI has taken the cash-strapped airline to the NCLT to recover their dues of over Rs 8,500 crore. Apart from banks, the airline also owes over Rs 10,000 crore to its hundreds of vendors, primarily aircraft lessors and over Rs 3,000 crore to around 23,000 employees who have not been paid since March.

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

The debt-ridden airline had suspended its entire operations on April 17. Subsequently, the government re-allocated its slots and foreign traffic rights to rival carriers.