Jet Airways
Jet Airways aircraft are seen parked at the Indira Gandhi International Airport in New Delhi, India, April 13, 2019. REUTERS/Anushree Fadnavis/File Photo

Even the feeble chance of Jet Airways returning to the skies could become cloudy as a host of the grounded airline's suppliers succeeds in setting in motion bankruptcy proceedings. The National Company Law Tribunal (NCLT) is set to decide this week whether to admit petitions from suppliers to the airline after payment defaults. Proceedings in the NCLT under the Insolvency and Bankruptcy Code (IBC) could hamper the efforts of the defunct airline's creditors led by the StateBank of India to find new investors to restart the airline's operations, according to media reports.

If NCLT accepts the pleas of car dealers Shaman Wheels and bulking packing suppliers Gaggar Enterprises under the IBC, the financial creditors would also have to become a party to the case to recover their money, a report on the Economic Times website says. The Mumbai bench of the bankruptcy court will decide whether to admit the petitions this week and the development could hurt the efforts of banks to cobble together a deal with investors to revive the airline.

The lenders' consortium has tried to keep the Jet Airways out of court-monitored insolvency proceedings, as sought by some operational creditors and suppliers, as it wanted to recover as much as possible from the debt-ridden airline. "We have to see what the Mumbai NCLT decides. If the petition is admitted, it's the end of the road for the airline," the report quotes an unidentified banker aware of the developments as saying. "We are not very hopeful of recovering our dues in bankruptcy as the other liabilities are much bigger than bank loans. We will have to see if other creditors will be treated on par with financial creditors."

Jet Airways
Workers cover the cockpit window of a Jet Airways aircraft parked at the Chhatrapati Shivaji Maharaj International Airport in Mumbai, on March 26.Reuters

The government is backing the banks' effort to implement a debt resolution plan that the SBI Securities is overseeing. Jet Airways, the country's first private airline and once its largest, ceased all operations on April 17 after lenders' bid to find investors for the troubled airline prolonged. Potential investors including the Hindujas of the United Kingdom and Etihad are apparently insisting on wiping out the equity holdings of existing investors, including minority owners, people in the know said.

Under those offers, lenders may have to let go of about 60 per cent of their arrears from the airline and take convertible securities for the remaining. The airline, which has a debt of more than Rs 8,000 crore apart from the outstanding payments to operational creditors and suppliers, has undergone a debt restructuring. After the debt-equity conversion, the lenders' consortium holds 51 per cent stake and founder Naresh Goyal, who stepped down in March as chairman, 24 per cent equity. UAE national carrier Etihad Airways holds 14 per cent stake and the rest is in the hands of the public.

Prime Minister Narendra Modi, who returned to power after the Lok Sabha elections 2019 with a thumping majority heading the Bharatiya Janata Party (BJP) government, will have to take a decision whether to rescue the private airline or let it sink. Hardeep Singh Puri, the new minister of state for civil aviation (independent charge) will soon be called upon to take a final decision as leaving the airline longer on life support benefits nobody.