The Supreme Court on Friday dismissed an appeal by the Jet Airways Aircraft Maintenance and Engineers Welfare Association (JAMEWA) against the National Company Law Tribunal’s decision to allow the sale of the airline’s premises at the Bandra Kurla complex in Mumbai to settle dues of Rs 360 crore from the HDFC lender. The lender had claimed that part of the office mortgaged to it should not be among the assets being considered for sale as part of the airline’s debt settlement process.
Jet Airways insolvency resolution practitioner Ashish Chhawchharia then petitioned the NCLT to seek permission to sell its third and fourth floors in the Godrej BKC building in order to use the proceeds to pay dues of Rs 360 crore from HDFC and to clear overseas debt of Rs 90 crore to transfer title. of six aircraft under the Export-Import Bank of the US (another financial creditor) to the debtor company, which would help maximize the value of the defunct airline. The creditors’ committee had last year in April 2020 approved the sale with 74.45% of the vote.
JAMEWA told a bench headed by Judge AM Khanwilkar that the approval granted for the sale of office space, worth Rs 490 crore, to settle dues from financial creditors during the CIRP period was in breach of the moratorium imposed under section 14 of the IBC.
The SC, after hearing all parties, rejected JAMEWA’s appeal, saying that the transfer had been made and that the payment made would be canceled if instructions to the contrary were issued. However, the Supreme Court kept the question of law open for determination in any other case.
Challenging the National Company Law Appellate Tribunal’s Feb. 14 ruling that upheld the June 11, 2020 NCLT order authorizing the sale of carrier real estate, the association alleged that the appellate authority interpreted section 14(1)(b) in a manner that renders it redundant and exercised its discretion to condone the breach which is a punishable offense under the Code.
He said the NCLAT erred in concluding that the CoC and Resolution Professional could sell the debtor company’s assets during the standstill period and that only the debtor company was prevented from making such a sale.
While Jet Airways admitted claims of around Rs 15,000 crore, UK firm Kalrock Capital founded by Florian Fritsch and UAE-based entrepreneur Murari Lal Jalan under the resolution plan offered to settle claims of Rs 475 crore in financial and non-financial financing. creditors. The consortium had offered a settlement of Rs 53 crore to employees whose admitted claims were worth Rs 1,265 crore, including JAMEWA’s Rs 170 crore.
The carrier ceased all operations in April 2019 and the NCLT on June 20, 2019 admitted the insolvency petition against Jet Airways filed by the consortium of lenders led by the State Bank of India.