Jet Airways’ Creditor Dispute Deepens Over Funding Source

India’s National Company Law Tribunal (NCLT) has extended the deadline for the committee of creditors (CoC) to respond to an affidavit by the Jalan-Kalrock Consortium (JKC), giving them until November 1, 2023. The affidavit sought to clarify the source of a contentious INR2 billion (USD24 million) payment linked to the consortium’s efforts to acquire Jet Airways (JAI, Mumbai International).

JKC recently disbursed INR3.5 billion (USD42 million) to settle outstanding claims by creditors and lenders, as per a mid-2022 NCLT-approved resolution plan. However, the relationship between the CoC and JKC has soured, leading to legal disputes.

The CoC has raised concerns about the origin of INR2 billion, contending that it does not comply with the resolution plan, which mandates payment through JKC. JKC’s counsel responded that while a portion of the sum came from external sources, the majority was provided by Murari Lal Jalan, the UAE-based businessman and Agio Image Group chairman who forms one part of the Jalan-Kalrock Consortium. The CoC’s objections are perceived by JKC as attempts to impede or delay the transfer of Jet Airways’ ownership.

In a separate development, the NCLT instructed the resolution professional for Jet Airways, Ashish Chhawchharia of Grant Thornton, to clarify the eligibility of JKC for the acquisition. This directive was issued in light of an ongoing investigation into Florian Fritsch, the other party in the consortium, involving fraud and money laundering offences in Europe. The CoC has expressed concerns about the funding sources and ethical standing of Jet Airways’ prospective owners.

India’s insolvency and bankruptcy codes prohibit individuals convicted of fraud-related offences, either in India or abroad, from acquiring insolvent entities during the resolution process. Although Fritsch remains under investigation in Europe, Chhawchharia has reportedly informally indicated to the CoC that the consortium is eligible to proceed with the takeover. An affidavit reinforcing this perspective has been submitted to the NCLT.