The Jet Airways crisis could eventually head towards insolvency if the creditors fail to reach a consensus on a resolution plan, a senior official said on Monday.
“The creditors and the debtors are in discussion. That’s the best process. If there is a good outcome of these negotiations between the creditors and the corporate debtor, then that’s better than dragging it to insolvency. But if that’s the only option left (going to the Insolvency and Bankruptcy Code-IBC- process), then the bankers will have to take a call at that stage,” Corporate Affairs secretary Injeti Srinivas said at an industry chamber CII event here on insolvency.
“IBC is a possibility for Jet Airways if the creditors cannot agree on a resolution plan”, he said.
State-run State Bank of India (SBI) Chairman Rajnish Kumar last week had said airlines being a service industry should not be brought under insolvency.
“For service industry , resolutions under IBC is near impossible and means grounding the airline ” he had said, making it clear Jet Airways was not heading towards the National Company Law Tribunal’s (NCLT) insolvency process as the lenders fear that would only make it impossible to recover any dues.
“So we will try till such time, and we have not reached the point where we can give up. IBC is the last option in recovery process”, he said.
Meanwhile the Jet Airways board will meet on Monday to seek the resignations of its founder Naresh Goyal and his wife, before lenders move in to inject funds and take management of the ailing airline which has been forced to ground many of its planes owing to non-payment of dues to the lessors. Its pilots have also not been paid for several months.
According to sources, as per a plan devised. The lenders will take over the airline for the time being and try to provide some comfort in terms of paying the salaries.
“Jet promoters need to exit before new promoters are roped in, and a clean deal is needed to sell Jet Airways”, a source said.
The full service carrier has a debt of Rs 9,000 crore owed to banks.
“Airline is a service industry and IBC is the last option here as under IBC resolution for airline is nearly impossible. IBC means that we are grounding the airline,
SBI is the lead lender of a consortium that has extended loans to Jet Airways.
