Jet Airways’ creditors and its new owners are deadlocked over a resolution plan to lift the Indian airline out of bankruptcy, putting its future in limbo, four sources said.
Creditors may approach India’s aviation ministry to seek approval to liquidate Jet’s assets if there is no resolution on Tuesday in a critical court hearing, a senior banker said.
“There are concerns the resolution plan may fall apart so we are looking to see if we can at least get something out of this deal via the liquidation route,” the banker, who has direct knowledge of the matter, told Reuters on Monday.
Once India’s biggest private airline, Jet ceased flying in April 2019 after it ran out of cash. It was taken to bankruptcy court by creditors owed about Rs 18,000 crore ($2 billion).
A restructuring plan was approved by the National Company Law Tribunal (NCLT) in June and Jet was set to resume operations by the first quarter of 2022 under its new owners.
However, disagreements between the new owners, a consortium including London-based Kalrock Capital and UAE-based businessman Murari Lal Jalan, and its lenders risk derailing Jet’s recovery.
A spokesperson for Jet’s owners said in a statement on Monday that the resolution plan was binding upon all involved parties and was approved by the bankruptcy court.
“We are working closely with the erstwhile lenders of Jet to implement this plan, and remain fully committed to getting Jet Airways off the ground,” it added.
The State Bank of India, the lead lender in the creditor group, declined to comment.
The court-appointed resolution professional overseeing the case did not immediately respond to an emailed request for comment from Reuters.
Jet’s creditors believe it needs around Rs 1,000 crore of capital to run its operations in full but it has not managed to bring that amount to the table, the banking source said.
“So far they have only shown that they have received Rs 1,500 crore worth of bank guarantees and around 200 million of cash which is not adequate to run the operations,” he added.