Jul. 1—A consortium consisting of Kalrock Capital and UAE-based entrepreneur Murarilal Jalan, the new promoters of Jet Airways (India) Limited whose insolvency plan was approved by the National Company Law Tribunal (NCLT) last week, cannot claim historicity to obtain airport slots belonging to the airline as it didn't have any operating slots on the day of the commencement of the insolvency process, the bankruptcy court said in the order that was released on Wednesday.
"The facts and circumstances would indicate that presently the slots cannot be restored to the Corporate Debtor on a historic basis. The thumb rule being 'use it or lose it'," said the judgement by two judges-bench headed by Janab Mohammed Ajmal and V. Nallasenapathy.
A slot is a permission given by a coordinator for a planned operation to use the full range of airport infrastructure necessary to arrive or depart at an airport on a specific date and time.
The Mumbai bench of the NCLT had in June 2019, admitted the insolvency petition against Jet Airways filed by the lenders' consortium led by State Bank of India (SBI), after the airline was grounded in April 2019 following an acute fund crunch.
After the grounding of Jet Airways, which held slots at major airports across the country including ones at New Delhi and Mumbai, its slots were temporarily redistributed to other airlines.
Lawyers representing the ministry of civil aviation (MoCA) and the Directorate General of Civil Aviation (DGCA) had earlier argued at NCLT that though the allocation of Jet's slots to other airlines was temporary, they couldn't be withdrawn from them without any legitimate basis.
"Keeping in view the purpose of Insolvency Resolution we trust that the authorities concerned including the Government of India shall take a holistic approach and provide necessary assistance to the SRA (successful resolution applicant) / Corporate Debtor in terms of the guidelines in allocation of slots as and when they are sought,...," said the judgement by Janab Mohammed Ajmal and V. Nallasenapathy.
"Even otherwise the Corporate Debtor immediately after the approval of the Resolution Plan would not be utilising all the slots. It can only seek slots as and when it had the Aircraft and the attendant wherewithal and logistical support in place, which according to the Resolution Plan would be in phases," it said adding that the Kalrock-Jalan consortium should then periodically seek allocation of slots from the authorities.
However, it will be important to see the approach taken by the authorities (DGCA ans MoCA) in slot allocation as the revival and resurrection of the airline will hinge on these decisions, said Ajay Shaw, Partner, DSK Legal.
"Another important issue that precipitates is that the lenders and the resolution professional should ensure the continuity of licenses of this nature to the extent feasible so as to ensure that the corporate debtor is able to get economic value as part of the resolution process," Shaw added.
The Committee of Creditors (CoC) of the grounded airline, led by SBI, had approved the resolution plan submitted by a consortium of UK's Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan in October 2020.
The consortium has proposed to invest INR600 crore in the first two years in the grounded airline to repay creditors and acquire an 89.79% stake in the carrier.
It has also proposed to pay INR131 crore, INR193 crore, and INR259 crore at the end of the third, fourth and fifth year, respectively, to financial creditors from the airline's cash flows.
Overall, the consortium hopes to repay INR1,183 crore to creditors over five years, which would include collections from asset sale proceeds and cash flows.
Murarilal Jalan had in a February interview to Mint said that he planned to keep Jet Airways public, and hoped to restart operations within four to six months of getting approval from the NCLT.
The new promoters will also retain the 'Jet Airways' brand and will resume operations with about 25 aircraft, with a base in New Delhi and restart international flights by the end of the year (2021), Jalan had said.
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