A bankruptcy court has extended the time to find a buyer for Jet Airways (India) Ltd even as the coronavirus pandemic threatens the survival of many airlines globally.
The Mumbai bench of the National Company Law Tribunal (NCLT) has allowed 90 days more to the insolvency professional that is managing Jet Airways to invite and evaluate bids for the grounded carrier.
The extension comes at the time when the growing spread of the coronavirus, which has infected nearly 200,000 worldwide and killed almost 8,000 people, has badly affected the aviation industry. Many countries have curbed air travel to control the virus from spreading, airlines have cut staff and flights and have warned their survival is in jeopardy if they don’t get any help from their respective governments.
Jet was grounded on April 18, 2019, after running out of cash and failing to secure funds from investors and lenders. The carrier was admitted for bankruptcy proceedings on June 20 last year.
The airline’s 270-day deadline under the Insolvency and Bankruptcy Code (IBC) ended on March 15. Three days before the deadline ended, the State Bank of India-led Committee of Creditors had sought a two-month extension from the NCLT for submission of bids.
So far, Jet Airways has had three rounds of bidding, all of which generated interest from some investors but didn’t receive any formal offers.
The IBC allows a maximum of 330 days for the bankruptcy resolution process. The 90-day extension provides for a total of 360 days to find a buyer for the ailing airline.
“This extension was given as there is some interest from three investors, who need more time to make their formal bids,” a person in the know said.
The person added that South America-based Synergy Group, Prudent Asset Reconstruction Company (ARC) and the Russian government-backed Far East Development Fund have verbally expressed interest in buying Jet Airways. However, no one has made a formal offer.
Jet Airways owed its creditors almost Rs 16,000 crore as on March 13. These include Rs 8,232 crore towards its financial creditors.
One of the major hindrances that bidders have pointed out is a lack of clarity on Jet Airways’ remaining flying slots at airports. The government has temporarily leased out Jet’s slots to other carriers.
In the previous rounds of bidding, Jet Airways had received interest from the UK-based Hinduja Group and Synergy Group, which owns a majority stake in Colombian carrier Avianca Holdings.
The carrier had also received initial expressions of interest from billionaire Anil Agarwal’s family trust Volcan Investment, which pulled out subsequently, as well as Panama-based investor Avantulo Group and Russian fund Treasury RA Creator, both of which did not submit any bids.
Jet’s former Abu Dhabi-based joint venture partner Etihad Airways, which owned a 24% stake in the Indian airline, did not show any interest.