Jet Airways’ Lenders’ Inquiry into Jalan-Kalrock Funding 2023
The revival saga of Jet Airways, once India’s premier private airline, has taken a new twist as lenders raise eyebrows over the financial backing of the consortium leading its resurgence. The Jalan-Kalrock consortium, the front runner in the bid to revive the beleaguered airline, has come under the scanner as lenders question the legitimacy and source of their funds.
Jet Airways ceased operations in April 2019 after facing mounting debt and dwindling cash reserves. The airline, which had been a significant player in India’s aviation sector, was burdened with more than $1 billion in debt, a sum that seemed insurmountable given its financial situation at the time.
Lenders on Wednesday cast doubt on the source of the cash injected by the acquirers, creating new concerns over the Jalan-Kalrock consortium’s acquisition of Jet Airways.
While the consortium was supposed to have submitted the whole sum of Rs 350 crore, the Committee of Creditors (CoC) informed the National Company Law Appellate Tribunal (NCLAT) that money had also been deposited from other sources. Jalan-Kalrock’s deposit of Rs 200 crore was thus not in accordance with the resolution plan, according to them.
Additional solicitor general N Venkatraman testified before NCLAT on behalf of the lenders and said there were concerns the money may have been laundered. The consortium’s foreign partner Florian Fritsch, whose houses were seized as part of a larger probe in 2022, raises issues in the eyes of the lenders.
According to Venkatraman, the lenders want to protest to Jalan-Kalrock’s compliance report.Senior attorney Krishnendu Dutta spoke on behalf of the consortium and asserted that the lenders had no intention of giving Jalan-Kalrock ownership of the airline.
Lenders must submit their objections by October 12 in order for the matter to be considered again.
The Jalan-Kalrock group said in late September that it had paid lenders an additional Rs 100 crore, bringing the total inflow to Rs 350 crore. On August 28, NCLAT had given the consortium permission to alter an existing bank guarantee to a value of Rs 150 crore and make a payment of Rs 200 crore by September 30.
The lenders had earlier that month informed the appellate panel that if the airline paid Rs 350 crore and complied with the terms, they could decide not to continue their case against the sale of the airline to the Jalan-Kalrock partnership. NCLAT had given the consortium an extension to make the payments in May.
After the grounding of Jet Airways, various players showed interest in its revival, leading to a bidding process. Among these was the Jalan-Kalrock consortium, a collaboration between UAE-based entrepreneur Murari Lal Jalan and London-based investment firm Kalrock Capital.
Their proposal stood out and was provisionally approved by the committee of creditors (CoC) overseeing Jet Airways’ insolvency process.
However, the journey to revival is not without hurdles. Some of Jet Airways’ lenders have raised concerns about the source of funding that the Jalan-Kalrock consortium plans to use for the airline’s resurgence:
- Transparency Issues: Lenders voiced concerns over the opaqueness surrounding the origin of the funds. Given the vast amount required to revive an airline of Jet’s stature, lenders seek absolute transparency in the financial dealings.
- Past Dealings: There have been murmurs about the past financial dealings of some members associated with the consortium. While nothing has been proven, such rumors can impact the trust lenders place in the revival plan.
- Regulatory Scrutiny: The airline industry is heavily regulated, and any hint of impropriety, especially concerning funding sources, can lead to regulatory hurdles. Lenders fear that the airline might face obstacles down the line if the funding source is not beyond reproach.
- Operational Concerns: Lenders are not just concerned about the money; they also want to ensure that the consortium has a clear and viable plan for the airline’s operations. Questions have been raised about the operational strategies proposed and whether the consortium can steer the airline back to its former glory.
In response to the concerns raised by the lenders, the Jalan-Kalrock consortium has repeatedly assured all stakeholders of the legitimacy of their funds.
They have expressed commitment to maintaining transparency throughout the process and have promised to furnish all necessary details to assuage the concerns of the lenders.
The revival of Jet Airways is significant, not just for its stakeholders but also for the Indian aviation industry, which has faced turbulence in recent times. A successful comeback of Jet Airways can be a beacon of hope and a testament to the resilience of the sector.
However, for this to happen, all parties involved need to be on the same page. It remains to be seen how the Jalan-Kalrock consortium addresses the concerns of the lenders and whether their proposed vision for Jet Airways will take flight.
The questioning of the Jalan-Kalrock consortium’s funding source highlights the challenges inherent in reviving a major enterprise. For Jet Airways, the stakes are high. While the concerns of the lenders are valid and rooted in due diligence, it is essential that the consortium provides the necessary clarity to move forward. The coming months will be crucial in determining the future trajectory of this iconic airline.
