Jet Airways' Consortium Plan Approved with Conditions | CIRP, Creditors, Employees Addressed

The Resolution Plan submitted by the Jalan Fritsch Consortium for Jet Airways (India) Limited was approved by the Tribunal with certain conditions and modifications. The Plan, approved by the Committee of Creditors with a 99.22% majority, addressed CIRP costs, Financial Creditors' claims, treatment of Employees and Workmen, Operational Creditors, and reinstatement of airport slots. The Plan was found compliant with the Insolvency and Bankruptcy Code and Regulations, and the Successful Resolution Applicant was directed to seek necessary approvals and reliefs. The Plan became binding on all stakeholders, and the moratorium under the Code ceased to be in effect.

---

---

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.
2. Treatment of Corporate Insolvency Resolution Process (CIRP) costs and claims.
3. Treatment of Assenting and Dissenting Financial Creditors.
4. Treatment of Employees and Workmen.
5. Treatment of Operational Creditors.
6. Allocation and reinstatement of airport slots.
7. Compliance with mandatory contents of the Resolution Plan under the Code and Regulations.
8. Approval of various waivers, extinguishments, and reliefs sought by the Successful Resolution Applicant (SRA).

Detailed Analysis:

Approval of the Resolution Plan:
The application was filed by the Resolution Professional (RP) seeking approval of the Resolution Plan submitted by the consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch (Jalan Fritsch Consortium). The Corporate Insolvency Resolution Process (CIRP) for Jet Airways (India) Limited was initiated on 20.06.2019. Multiple rounds of Expression of Interest (EoI) were conducted, leading to the final approval of the Resolution Plan by the Committee of Creditors (CoC) with a 99.22% majority.

CIRP Costs and Claims:
The Resolution Plan provided for the payment of CIRP costs, including operating and process costs, interim finance costs, and airport parking charges. The SRA set aside Rs. 25 Crores towards CIRP costs and proposed a mechanism to handle any excess costs. The payment of CIRP costs was to have precedence over other payments.

Assenting and Dissenting Financial Creditors:
The total admitted claims of the Financial Creditors were Rs. 7807.74 Crores. The Resolution Plan proposed various payouts, including upfront payments, Zero Coupon Bonds, Non-Convertible Debentures (NCDs), equity stakes in Jet 2.0 and Jet Privilege Private Limited (JPPL), and upsides on the sale of aircraft and spares. Dissenting Financial Creditors were to be paid liquidation value in priority.

Employees and Workmen:
The Corporate Debtor had a large number of employees and workmen on its payrolls. The SRA proposed the formation of an employees' trust, transfer of equity stake, cash payments, IT assets, and free tickets. The SRA also proposed to demerge employees to Airjet Ground Services Limited (AGSL) and offered a fixed sum of Rs. 52 Crores towards settlement of claims.

Operational Creditors:
The liquidation value due to Operational Creditors was presumed to be NIL. However, the SRA proposed a fixed sum of Rs. 15,000 to each Operational Creditor, and options for ticket refunds or future ticket credits for claims classified as "Ticket Refund." The Dutch Administrator's claims were to be settled with a maximum sum of Rs. 10,000.

Allocation and Reinstatement of Airport Slots:
The SRA sought directions for the reinstatement of slots, bilateral rights, and traffic rights. The Tribunal discussed the guidelines for slot allocation and concluded that the slots could not be regarded as assets of the Corporate Debtor. The slots vacated by Jet Airways were allocated to other airlines on a temporary basis. The Tribunal emphasized the need for a holistic approach to assist the SRA in obtaining slots as and when required.

Compliance with Mandatory Contents of the Resolution Plan:
The Resolution Plan was found to be in compliance with Section 30(1) & (2) of the Code and Regulations 38 and 39. The Plan provided for the payment of CIRP costs, debts of operational creditors, management of the Corporate Debtor's affairs, implementation and supervision of the Plan, and a declaration of compliance with applicable laws.

Waivers, Extinguishments, and Reliefs:
The SRA sought various approvals, waivers, and extinguishments, including tax and stamp duty exemptions, business and government contracts, and reconstitution of share capital. The Tribunal directed the SRA to approach respective authorities for such reliefs, which should be considered favorably.

Conclusion:
The Resolution Plan submitted by the Jalan Fritsch Consortium was approved by the Tribunal, subject to certain conditions and modifications. The Plan was binding on all stakeholders, and the moratorium under Section 14 of the Code ceased to have effect. The Monitoring Committee was tasked with supervising the implementation of the Plan, and the RP was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI).

---