- Supreme Court slams NCLAT’s ruling and ordered immediate liquidation
- Jet Airways’ liquidation ruling ends years of failed revival attempts
- Becomes the second major airline in India to be liquidated under the IBC
Rise and Fall of Jet Airways
Once a symbol of luxury and reliability in India’s skies, Jet Airways’ journey has officially come to an end with the Supreme Court’s ruling for its liquidation on November 7. Established in 1993, Jet Airways rose to prominence as India’s premier private airline, known for its world-class service and extensive network, which earned it a loyal customer base. However, in 2019, the airline grounded its fleet, weighed down by overwhelming debt and financial mismanagement. Hopes for a revival flickered when the Jalan Kalrock Consortium (JKC) won the bid to resurrect Jet in 2021, but ultimately, the challenges proved insurmountable. The court’s recent decision brings a conclusive end to a long battle to save the airline, highlighting the complex landscape of corporate recoveries in India’s aviation sector.
Supreme Court Orders Liquidation
The Supreme Court’s liquidation order followed an extended legal dispute between Jet Airways’ creditors and JKC. The court ruled that JKC had failed to meet key financial commitments outlined in the 2021 resolution plan, including a cash infusion of Rs 350 crore and payment of Rs 226 crore in overdue employee salaries. These financial benchmarks were critical to Jet’s revival, and their absence left the court with limited options.
Setting aside a previous ruling by the National Company Law Appellate Tribunal (NCLAT), the Supreme Court noted that the NCLAT’s leniency in allowing JKC to proceed with the acquisition was incompatible with the principles of India’s Insolvency and Bankruptcy Code (IBC). Justice Pardiwala emphasized that the case underscores the need for stricter adherence to the IBC’s standards, describing it as an “eye-opener” for future insolvency cases.
Failed Revival Efforts and Missed Obligations
JKC’s bid for Jet Airways initially generated optimism among stakeholders and aviation enthusiasts. However, the consortium encountered hurdles at every turn. Lenders, led by the State Bank of India (SBI), argued that JKC failed to fulfill its commitments, both financially and logistically. In addition to missing the required funding, JKC was unable to secure essential regulatory approvals, including an air operator certificate and security clearances necessary for Jet’s operational restart.
Despite JKC’s claims that regulatory delays and complications from lenders hindered its progress, the court found these arguments insufficient. The decision reinforced the importance of accountability in insolvency cases, highlighting that companies taking over distressed assets must strictly adhere to their financial and operational obligations.
Forfeiture and Financial Implications
The Supreme Court’s liquidation order mandates immediate action by the National Company Law Tribunal (NCLT) in Mumbai to appoint a liquidator. As a consequence, the Rs 200 crore invested by JKC will be forfeited. Additionally, the lenders are authorized to invoke a Performance Bank Guarantee (PBG) of Rs 150 crore to recover some of their losses. This financial resolution reflects the court’s stringent stance on ensuring that lenders are not unduly disadvantaged when a bidder defaults on obligations.
An Era Ends for Jet Airways, Lessons for the Future
The liquidation of Jet Airways, following closely after the collapse of GoFirst, underscores the harsh realities faced by India’s aviation industry. While Jet Airways was once a flagship carrier, its end is a sobering reminder of the challenges that debt-laden airlines face, especially within the framework of India’s bankruptcy laws. The Supreme Court’s decision emphasizes the need for transparency, accountability, and stricter compliance with the IBC, setting a precedent for future insolvency proceedings in the aviation sector and beyond.
Jet Airways’ journey, from a pioneer in Indian aviation to a grounded airline, is now officially over. As lenders and employees move forward, the story of Jet serves as a lesson in the complexities of corporate revival and the judiciary’s crucial role in enforcing accountability in the face of financial distress.
(With inputs from agencies)
