The efforts of Jet Airways’ lenders to initiate insolvency proceedings against the airline is going through new challenge. The trustee has been appointed by a Netherlands court, which had last month declared the grounded airline bankrupt, seeking to intervene.
“Jet Airways has already been declared bankrupt by the Holland District Court and we want to argue the applicability of crossborder insolvency law in this case,” said counsel Kiran Sharma, who along with counsel Sumant Batra, is advising the trustee in the case.
On Wednesday, they moved an intervention application in the case. The Mumbai bench of the National Company Law Tribunal (NCLT) said it would consider the plea along with a bunch of other applications on Thursday.
The Netherlands court had declared BSE-listed Jet Airways bankrupt on an application made by two transport services providers. It has appointed Rocco Mulder as the administrator in the bankruptcy proceedings of the Indian airline company.
The foreign court’s order is unlikely to affect the other petitions before the NCLT, said Ashish Pyasi, an advocate with law firm Dhir and Dhir Associates.
“First, today there is no provision for cross-border insolvency in India under the IBC. Secondly, If the order of a foreign court is to be executed, then there is a separate provision under the civil code for execution and in the event of any conflict between the IBC and civil code, provisions of the IBC will override (the other). So, execution of such foreign order may come under the conflict,” he added.
On Wednesday, State Bank of India sought to initiate insolvency proceedings against Jet Airways, before the dedicated bankruptcy court begins hearing the complaints of two operational creditors on Thursday.
The NCLT directed the state-run bank to file its written submissions and decided to hear the matter along with the pleas of the operational creditors. “The board of directors of the company is non-existent and there is significant urgency on the matter,” Animesh Bisht, a senior associate at Cyril Amarchand Mangaldas, who is representing SBI, told the NCLT. “We have filed a Section 7 application to initiate insolvency petition against Jet Airways.”
Section 7 of the Insolvency and Bankruptcy Code gives financial creditors the power to file a plea against a corporate debtor.
However, the bench, presided over by VP Singh and Ravikumar Duraisamy, declined to immediately entertain any request. The counsel for Jet Airways pilots’ union, who too sought to intervene, was also asked to be present during the proceedings on Thursday.
The two operational creditors — ShamanWheels and Gaggar Enterprises — had earlier filed two separate insolvency pleas against the airline in the Mumbai NCLT. These cases were earlier listed for June 10, but were adjourned to Thursday. The lender’s petition is most likely to be clubbed with these.
Grounded since April 17, lenders were unable to find a white knight for Jet Airways which has accumulated debt of Rs 8,500 crore and total liabilities of more than Rs 25,000 crore. The banks involved in the turnaround of what was India’s second largest airline until last year stated that reversing its negative net worth and getting it back to the skies would be a big challenge for prospective investors.