• Friday, March 29, 2024

Business

Indian bank asks tribunal to reject Jet Airways rescue plan

An aircraft of the now defunct Jet Airways parked at the Chhatrapati Shivaji Maharaj International Airport (CSMIA) in Mumbai in the Indian state of Maharashtra. (Photo by INDRANIL MUKHERJEE/AFP via Getty Images)

By: Shubham Ghosh

INDIA’S second-largest state lender Punjab National Bank (PNB) on Thursday (2) appealed a tribunal to quash a rescue plan for the defunct debt-laden Jet Airways, alleging irregularities in it. The move could hit possibilities of the grounded airline making a comeback soon, Reuters reported. The tribunal agreed to hear the bank’s case.

Last year, a consortium of the UK-based Kalrock Capital and a businessman from the UAE agreed to pump in Rs 10 billion as working capital and give funds to the carrier’s creditors. Jet was hit hard by piling up debt two years ago.

ALSO READ: India bankruptcy court clears Jet Airways revival plan, carrier to take off by end 2021

Jet, which was once India’s biggest private carrier, was crippled by losses and the growing debt as it tried to compete with low-cost rivals and eventually had to ground all its flights in April 2019, putting in trouble its lessors, suppliers, lenders and several employees.

Indian bank asks tribunal to reject Jet Airways rescue plan
Indian men walk past signage for the state-owned Punjab National Bank (PNB) in Mumbai in the Indian state of Maharashtra. (Photo by INDRANIL MUKHERJEE/AFP via Getty Images)

Neither the PNB nor Ashish Chhawchharia, a court-appointed official in charge of the airline’s revival nor the consortium investing funds into the airline responded to a query from Reuters about the development.

Creditors back plan to get Jet Airways flying again

PNB said that the Jet’s court-appointed rescue official had initially accepted its claim of nearly Rs 10 billion from the airline’s backers but then slashed it by Rs 2 billion, as per its tribunal filing witnessed by Reuters.

According to the bank which argued at the National Company Law Appellate Tribunal. A reduction of the amount was arbitrary and illegal.

On Thursday, additional solicitor general of India Aman Lekhi told Reuters that the tribunal agreed to hear the company’s plea. The case will be heard on September 21.

“How PNB has been treated is wrong – both substantively and procedurally,” Lekhi said.

Jet’s resolution plan was approved by its financial creditors last year. According to PNB, since the resolution plan mandated only minimum payment of liquidation value for dissenting creditors, it was left with little choice but to approve the plan, the report added.

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