Shares of Jet Airways India Ltd fell by 10% to Rs 56.60 on Friday after the National Company Law Tribunal (NCLT) admitted the State Bank of India (SBI)-led lenders’ insolvency application against the debt-laden airline.
The Jet Airways stocks had risen a whopping 122% to close at Rs 73.55 on Thursday on hopes that NCLT may not admit the insolvency plea, but that didn’t turn out to be the case.
The Mumbai bench of NCLT did not just accept the petition, but also suggested a timeline of 90 days for the resolution of the case, citing it as a matter of national importance. The corporate insolvency resolution process is normally supposed to be completed in 180 days, with a provision for extension by another 90 days.
NCLT directed Jet Airways’ Insolvency Resolution Professional (IRP) to submit fortnightly progress reports on the case, with the first such report to be submitted before July 5. On 18 June, SBI had filed insolvency petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) and also proposed Ashish Chhawchharia of Grant Thornton as IRP.
SBI Chairman Rajnish Kumar said on Thursday that the decision to refer the resolution of Jet Airways under IBC was taken after due diligence by all lenders. “There are cogent reasons for lenders. Every decision is taken after a lot of due diligence,” Kumar said during SBI’s annual general meeting (AGM).
Kumar also said that the possibility of liquidation could not be ascertained at this stage. “How can I foresee what will happen in NCLT, this is the first case of aviation sector bankruptcy that will be tested,” he added.
Jet’s lenders have been trying to sell the company for the past five months, but have failed to find buyers. They wanted to avoid the insolvency court to recover maximum dues. With the airline now going to NCLT, the banks will be staring at a huge haircut on the loans given to the company.
The airline owes over a total of Rs 8,500 crore to 26 banks, Rs 10,000 crore to its hundreds of vendors, primarily aircraft lessors, and Rs 3,000 crore to around 23,000 staff who have not been paid since March, according to media reports.
Keywords: State Bank of India, SBI, Jet Airways, National Company Law Tribunal, NCLT, Naresh Goyal, Jet Airways, Jet Airways Share, Jet Airways share price, Jet Airways stocks
Source: News18