Jet Airways to get a new owner: Consortium led by Kalrock Capital wins bid

The resolution plan submitted by UAE-based entrepreneur Murari Lal Jalan and Kalrock founder Florian Fritsch has been approved by the Committee of Creditors.
Jet Airways
Jet Airways
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Jet Airways is finally set to get a new owner one-and-a-half years after it suspended operations due to a cash crunch. After over a day of deliberation, the Committee of Creditors have declared the consortium led by Karock Capital and UAE-based entrepreneur Murari Lal Jalan as the winning bidders for the beleaguered airline. 

The resolution professional of the airline will submit the winning bid to the National Company Law Tribunal, which will then have to give its approval before the consortium is declared as new owners of the airline. 

“The e-voting concluded today, ie. October 17, 2020 and the resolution plan submitted by Mr. Murari Lal Jalan and Mr. Florian Fritsch has been duly approved by the CoC under section 30(4) of the Code as the successful resolution plan. The Resolution Professional is in the process of filing an application in accordance with section 30(6) of the Code for approval of the said resolution plan by the Hon'ble NCLT and intimation of the same shall be given to the members as required,” Jet Airways said in a regulatory filing. 

The consortium of Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan reportedly offered higher returns to lenders. CNBC TV18 reported that their offer includes a total payout of Rs 866 crore to all lenders. The report said that this included Rs 380 crore payout to financial creditors, and non-convertible debentures (NCDs) guaranteeing Rs 391 crore of net present value. This, the report added, is excluding airport and parking charges.

According to a Business Standard report, the airline’s operation permit will have to be made active, and licenses of its pilots and engineers will have to be renewed. Without these, the resolution plan may not succeed, the business daily quoted a source as saying. 

However, an official in the civil aviation ministry told BS that slots and rights wouldn’t be an issue and can be reallocated according to size and demand of the airline.

Reports state that the Kalrock Capital and Murari Lal Jalan consortium won the bid with an overwhelming majority. 

The consortium led by the Haryana-based Flight Simulation Technique Centre (FSTC) had reportedly offered around Rs 770 crore including equity for lenders in both the airline and Jet Privilege Private Limited, which Kalrock consortium offered as well. FSTC is a consortium led by Sanjay Mandavia, CEO of FSTC, Imperial Capital Investments LLC (ICIL), and Big Charter Pvt Ltd (BCPL).

Reports had earlier suggested that the Kalrock Capital consortium said in their bid that they plan to restart Jet with 27 wide-bodied aircraft, while the FSTC consortium proposed to restart the airline with five single-aisle aircraft and serve domestic and medium-haul markets.

After months of financial trouble, mounting dues and unpaid salaries, Jet Airways suspended operations on April 17, 2019.

Jet Airways owes lenders Rs 8,000 crore and is reportedly facing claims (including vendors) of up to nearly Rs 40,000 crore. Of this, claims worth Rs 14,640 crore were reportedly admitted by the resolution professional.

The airline’s insolvency proceedings began at the National Company Law Tribunal (NCLT) on June 20, 2019, and has been extended several times since then as it failed to receive serious bids.

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