Raids on Kalrock Capital's investor: Jet Airways hopes to escape unhurt

Raids on Kalrock Capital’s investor Florian Fritsch would not have any impact on the Jet resolution plan, people close to the consortium buying the airline said.

“The resolution plan has already been approved by the committee of creditors and the National Company Law Tribunal (NCLT). Investors have put their money in this deal,” the source said.

The sources said that the raids are on an individual and do not amount to culpability. Also, the investor in the consortium is the PE fund and not an individual.

The person also said that Section 29A of the Insolvency and Bankruptcy Code (IBC), which bars certain parties from taking part in the resolution process, exempts PE funds. “The Kalrock-Jalan consortium has already passed the muster for 29A. Legally, 29A is tested at the time of submission of the resolution plan,” the source said.  

IBC experts said that upon approval of a resolution plan by the NCLT, it is binding on all the stakeholders as stated in the Code. “There is no scope for a resolution applicant to renege from the commitments made in the approved plan irrespective of any extraneous reasons. The Code provides for penal consequences in case an applicant fails to comply with its approved plan,” said Diwakar Maheshwari, dispute resolution partner, Khaitan & Co. 

Multiple properties of Fritsch were raided in Liechtenstein, Switzerland, and Austria on October 26. It was on the basis of complaints received by certain people, according to reports.

Kalrock-Jalan had won the bid for Jet Airways in October 2020. Despite approval by the NCLT, the resolution plan has not been implemented yet, due to various reasons.

One of the recent issues was the appellate tribunal — National Company Law Appellate Tribunal (NCLAT) — order that directed the consortium to pay gratuity and provident fund to the airline’s employees. They were to be paid till the date of insolvency commencement in June 2019.

Lenders to Jet Airways are not keen to share this additional liability of the carrier as demanded by the consortium, said banking industry sources.

According to the revival plan, the consortium proposed an infusion of Rs 1,375 crore. This includes Rs 900 crore towards capex and working capital as well as Rs 475 crore to settle claims of creditors.

The approved plan has a clause that states that the amount infused by the consortium for settlement of claims of all stakeholders would be limited to  Rs 475 crore. Jet Airways did not respond to Business Standard’s queries regarding raids on Fritsch and its impact on the airline.