Jalan-Kalrock to transfer Rs 130 crore rental earnings to Jet Airways’ lenders

Jet Airways, led by the new management, has for the time being averted liquidation proceedings by agreeing to transfer to banks about ₹130 crore received from the lease-rentals of Air Serbia planes, said people aware of the development.

However, the Jalan-Kalrock Consortium, which has won the bid to acquire the company under the Insolvency and Bankruptcy Code (IBC), cannot place an order to buy aircraft until it obtains a no-objection certificate from its lenders, the people said. According to them, the lenders said they would give a NOC only after the consortium commits to a timeline for implementing the debt resolution plan, which involves staggered payment to gain ownership of the airlines.

The consortium has offered payments of ₹380 crore in instalments and a 9.5% stake in the airline company to the lenders. The National Company Law Tribunal (NCLT) had approved its plan in June last year, but the consortium has not yet paid the lenders, the people said.

Executives at the consortium denied facing any restrictions to go ahead with its plans. “This is absolutely incorrect, and the NCLT process does not restrict us,” said a spokesman for the consortium.


“Liabilities and timelines for the payment of liabilities of past lenders are fixed and have no relation to the new business which does, including placing an aircraft order. The intent of the IBC is to revive businesses and not restrict or liquidate them. A successful resolution applicant, that is Jalan-Kalrock Consortium, is free to make operational decisions or acquire new assets for the company’s revival, as per its business plan/needs and requirements,” he added.

The consortium includes Murari Lal Jalan, an NRI based in the UAE, who will hold shares of Jet in his personal capacity, and Florian Fritsch, who would hold shares through his investment holding company – Kalrock Capital Partners, Cayman.

Jalan’s business interests are spread over the UAE, Brazil, India, Uzbekistan and the Philippines, according to the resolution plan.

ET reported on July 22 that lenders led by

had threatened to liquidate the airline if the winning bidder didn’t agree to distribute rentals received from Air Serbia planes leased out by Jet Airways.

People in the know said a majority of lenders had agreed to distribute among themselves the lease-rental income of ₹130 crore accumulated from Air Serbia as on May 31.

“The liabilities of the Jalan-Kalrock consortium are clearly defined in the NCLT-approved resolution plan, and the consortium is in full compliance with all obligations. The implementation of the resolution plan with the banks is moving forward effectively,” said the spokesperson.

But the settlement will likely take time.

Meanwhile, the Jalan-Kalrock consortium hasn’t yet given an effective date for the implementation of its own resolution plan for Jet Airways.

“Until the effective date is given, the Jalan Kalrock consortium cannot transfer Jet’s assets and hence can’t take a decision to buy more assets (aircraft) without the go-ahead of the lenders,” said a person close to the development.

Jet stopped operations on April 17, 2019, due to a cash crunch. Its lenders led by

dragged it to the NCLT in June. Exactly after two years, the NCLT cleared the consortium’s resolution plan.

Jet has been in advanced round talks with plane makers Airbus and Boeing to purchase planes. Executives at both companies said the talks had gone slower in the last few weeks after the lenders raised issues. Meanwhile, the airline plans to start operations in September with leased planes.

“All the decisions are taken in consultation with a monitoring committee which has representatives from Jet’s lenders too. They have approved the leasing of aircraft to start operations afresh. There is no reason why they won’t say yes to a purchase too,” said a person from the Jalan-Kalrock camp.

Lenders’ recovery equates to just 5% of their claims, thus limiting the downside if the company is liquidated.

The resolution professional, Ashish Chhawchha backed by Grant Thornton, has admitted ₹7,453 crore in claims from verified creditors.

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