Jet Airways Acquisition Stalls as Consortium Seeks Court Permission for Payment Instrument Swap
The revival of Jet Airways faces another hurdle as the Jalan Kalrock Consortium (JKC), the prospective new owners, sought court approval to substitute a crucial INR1.5 billion (USD18.1 million) bank guarantee with a different payment instrument. This move comes in the wake of the Supreme Court of India’s directive, issued in January 2024, mandating the consortium to deposit the said amount into an escrow account by January 31, 2024, as part of the conditions to acquire the insolvent airline. The court’s decision effectively overruled a previous ruling by the National Company Law Appellate Tribunal in August 2023, which had permitted the JKC to use the guarantee to fulfill the remaining financial obligations to creditors under a 2021 resolution agreement.
Jet Airways, which ceased operations in April 2019, has since seen admitted creditor claims amounting to INR78 billion (USD940.5 million). In an effort to resurrect the airline, the JKC committed to a payout of INR3.5 billion (USD42.2 million) to creditors and lenders, with the INR1.5 billion representing the final installment. However, the ongoing contentious relationship between the consortium, the airline’s administrator, and the creditors’ committee—a collective of 11 banks—has significantly impeded the sale and transition process, leading to continuous disputes and legal actions.
As the end-of-January deadline approached, the consortium’s request to release the bank guarantee in favor of a new payment method has been met with skepticism by the creditors’ committee, which views it as yet another delay tactic. The consortium, comprising Dubai-based Murari Lal Jalan and UK-based Kalrock Capital, has cited complications arising from bank holidays and the need for regulatory approval from India’s central bank due to the foreign residency of its members as reasons for the payment delays.
The ongoing legal battles and mutual accusations between the JKC and the creditors underscore the complexities of reviving Jet Airways, once a premier Indian airline. As each party blames the other for the stalled transition, the future of Jet Airways hangs in balance, awaiting a resolution that can navigate the intricate legal and financial challenges it faces.