2019 (6) TMI 1154 - Tri - Insolvency and Bankruptcy

SBI's Insolvency Petition Admitted Against Jet Airways, Creditors Dismissed

State Bank of India, Gaggar Enterprises Private Limited And Shaman Wheels Private Limited Versus Jet Airways (India) Limited

State Bank of India, Gaggar Enterprises Private Limited And Shaman Wheels Private Limited Versus Jet Airways (India) Limited - TMI Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (I&B Code), 2016.2. Claims by Operational Creditors under Section 9 of I&B Code.3. Financial exposure and default by the Corporate Debtor.4. Security interests and loan agreements.5. Recognition and impact of foreign insolvency proceedings.6. Appointment of Interim Resolution Professional (IRP).7. Declaration of moratorium under Section 14 of I&B Code.8. Procedural directions for CIRP.Detailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the I&B Code:The Company Petition (CP) No. 2205/2019 was filed by State Bank of India (SBI), the Financial Creditor, under Section 7 of the I&B Code for initiating CIRP against Jet Airways (India) Limited, the Corporate Debtor. The petition was filed on 17th June 2019, and the default amount was stated to be Rs. 462,39,38,604.55, representing the overdrawn amount over the sanctioned limit of the cash credit facilities granted by the Financial Creditor.2. Claims by Operational Creditors under Section 9 of I&B Code:Two other petitions under Section 9 of the I&B Code were filed by Gaggar Enterprises Private Limited and Shaman Wheels Private Limited, claiming to be Operational Creditors of the Corporate Debtor. These petitions were listed for argument on 20.06.2019 and were dealt with in a common order due to their relation to the same Corporate Debtor.3. Financial Exposure and Default by the Corporate Debtor:The Petitioner granted a term loan of Rs. 1090 Cr. and additional term loans, along with working capital facilities. The aggregate amount of default as on 15.06.2019 was Rs. 462,39,38,604.55. The default occurred as the amounts remained overdrawn for more than 30 days. The Petitioner provided evidence of the default, including CRILC reports and letters from the Corporate Debtor requesting financial assistance and deferral of loan repayments.4. Security Interests and Loan Agreements:The loan facilities were secured by various security interests, including first ranking pari-passu charge on Domestic Credit Card Receivables and other assets. The Petitioner annexed several agreements and certificates of registration of charges issued by the Registrar of Companies, establishing the existence of the debt.5. Recognition and Impact of Foreign Insolvency Proceedings:Insolvency proceedings against the Corporate Debtor had already been initiated in the Netherlands, with Mr. R. Mulder appointed as the Administrator in Bankruptcy. However, the Tribunal noted that there is no provision in the I&B Code to recognize foreign insolvency judgments. The objections raised by the Intervener based on the foreign court's order were not sustainable, as the order was considered a nullity in the eye of law.6. Appointment of Interim Resolution Professional (IRP):The Petitioner proposed Mr. Ashish Chhawchharia as the IRP, and his appointment was accepted. The Tribunal directed the IRP to submit fortnightly progress reports and to take immediate control of the Corporate Debtor's assets.7. Declaration of Moratorium under Section 14 of I&B Code:The Tribunal declared a moratorium, prohibiting the institution or continuation of suits or proceedings against the Corporate Debtor, transferring or disposing of its assets, and recovery actions by owners or lessors. The supply of essential goods or services to the Corporate Debtor was to continue uninterrupted during the moratorium period.8. Procedural Directions for CIRP:The Tribunal emphasized the importance of resolving insolvency in a time-bound manner, considering the significant number of employees and the national importance of the Corporate Debtor. The IRP was directed to expedite the CIRP and submit the first progress report by 5th July 2019. The Tribunal also directed immediate communication of the order to the Financial Creditor, Corporate Debtor, and IRP.Order:The petition filed under Section 7 of the I&B Code by SBI was admitted, initiating the CIRP against Jet Airways (India) Limited. The petitions filed under Section 9 by the Operational Creditors were dismissed as infructuous, with the Petitioners given liberty to file their claims before the resolution professional. The Tribunal declared a moratorium and appointed Mr. Ashish Chhawchharia as the IRP, directing expedited proceedings and immediate control of the Corporate Debtor's assets. The matter was listed for further hearing on 5th July 2019.