Skip payment and gratuity fees

Jet Airways’ relaunch in its new avatar is likely to be further delayed due to a standoff over payments.

Jet Airways’ relaunch in its new avatar is likely to be further delayed due to a standoff over payments.

The Jalan-Kalrock consortium which won the bid to resurrect the airline has filed a claim with the National Company Law Appeal Tribunal (NCLAT) suggesting it will not make any additional payments beyond the Rs 475 crore approved in its resolution plan.

This request relates to an order dated October 21, in which NCLAT ordered the consortium to make payment of unpaid FPs and gratuities to workers and employees of the airline until June 2019, when the insolvency proceedings was launched.

The court had asked former resolution professional Ashish Chhawchharia to calculate these payments within a month and report them to the consortium. However, in the application, JKC appealed to the court to clarify whether the winning consortium was responsible for paying these dues.

Quoting excerpts from the resolution plan, Jalan-Kalrock said any additional payment above the approved Rs 475 crore should first be paid from Jet’s positive bank balance and the remainder from Rs 475 crore, which is reserved for various creditors.

The breakdown of this Rs 475 crore includes Rs 380 crore payable to lenders and Rs 52 crore to employees and workers and the remainder to other operational creditors, none of which have yet been paid by the consortium.

It should be noted JKC’s application in the NCLAT coincides with the November 16 deadline to prepay Rs 185 crore as the first installment to lenders.

It is important to point out that, in accordance with the resolution plan, the consortium estimated the total dues of employees and workers at Rs 113 crore, of which it had agreed to pay Rs 52 crore and the remainder Rs 61 crore was to be deducted from the first crore. installment payment to lenders.

After taking a 95% haircut on their loans, sources say the lenders are unlikely to agree to pay the PF and gratuity fees on the few hundred crore they have yet to receive.

Jet’s The positive cash balance JKC refers to was estimated to be around Rs 225 crore in January when the consortium applied to the NCLT for permission to use this money for airline expenses until the resolution plan takes effect. effect. However, the court denied his request in March.

The consortium again attempted to draw the court’s attention to the airline’s positive cash balance to make PF and gratuity payments which the sources say amount to more than Rs 200 crore.

JKC had pledged to inject Rs 900 crore into capital expenditure and working capital. So far, he has deposited only Rs 150 crore as performance guarantee.

But the consortium says it has spent heavily on recovery efforts.

“JKC has, to date, spent considerable sums on the revival of Jet Airways and continues to incur expenses for the revival of the airline,” he told CNBC-TV18.

The airline’s relaunch has taken much longer than expected, with the consortium missing several targets set for its take-off.

On Nov. 11, JKC told CNBC-TV18 it was waiting for the lenders to transfer ownership of the airline, after which payment terms will be determined. As previously stated, the lenders are unlikely to sell the airline to the buying consortium without receiving their first installment payment. While there’s been no official word from the lenders so far, the latest developments point to a growing standoff that threatens Jet’s turnaround.

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