In a significant ruling that could break fresh grounds in cross-border insolvency, the National Company Law Appellate Tribunal (NCLAT) on Thursday allowed a Dutch insolvency court administrator to be a part of, and attend the Committee of Creditors (CoC) meetings of Jet Airways.
In doing so, the NCLAT set aside an order of the Mumbai-bench of National Company Law Tribunal (NCLT), which had said that the Dutch court administrator had no jurisdiction in India and therefore would not be able to take part in Jet Airways' CoC meetings or raise claims on the airlines' assets in India. The NCLT had also held the Dutch insolvency court proceedings as "null and void" in India.
On September 20, the Resolution Professional of debt-laden Jet Airways and the Dutch insolvency court administrator had told the NCLAT that they had finalised the terms of cooperation between them.
Though the CoC of the airline had objected to the presence of the Dutch court insolvency administrator during the meetings, the appellate tribunal had rejected the contention.
"He should be there...he has to collate his claims. Both sides should go together...he must be there for maximisation of value of assets," NCLAT Chairperson Justice S J Mukhopadhaya had then said.
The ruling by the NCLAT is an exception rather than the norm as in the absence of an international arrangement there is no scope for interference with an insolvency proceeding in India on account of an insolvency proceeding in Netherland, said Ajay Shaw, Partner at DSK Legal.
"NCLAT’s decision to allow the Dutch administrator to participate in the CoC proceeding of the Indian entity is with intent to ensure cooperation and coordination between the RP and the Dutch administrator as per the terms and conditions of the agreement mutually agreed to between them,” said Shaw.
Apart from India, Jet is facing insolvency proceedings in the Netherlands, which is a regional hub for the European operations of the airline. The airline was declared bankrupt in the Netherlands in response to a complaint filed by two European creditors, H Esser Finance Company and Wallenborn Transport, who had claimed unpaid dues worth Rs 280 crore.
Following this, the insolvency administrators had approached the NCLT with a plea that they should be allowed to access the firm's assets in India, too, which would enable them to recover monies to pay off the two European creditors. The NCLT had rejected the Dutch administrator’s plea for being heard in the case, following which they had approached the appellate tribunal.
The NCLAT had, while agreeing to hear the Dutch court administrator, also stayed a portion of the NCLT Mumbai Bench's order that held that Dutch administrator's offshore proceeding were not maintainable and hence, they could not be allowed to access the airline’s financial assets in India.
On Thursday, while setting aside the entire order, the NCLAT also said the Dutch insolvency court administrator would also be given minutes of the meeting, along with a seat in the CoC.
"In the absence of any cross border insolvency framework this appears to be more of a workable solution so that the creditors of jet airways who are not in India and have been participating in the foreign insolvency process can also participate in the process going on in India,” said Ashish Pyasi Associate Partner at Dhir and Dhir Associates.