The future of the grounded Jet Airways just got a shade bleaker on Monday with the lenders, led by State Bank of India (SBI), deciding to initiate bankruptcy proceedings against the airline after all attempts to rope in a buyer failed.
As revival hopes faded, investors dumped the airline's shares. Jet's stock closed 16.76 per cent or Rs 13.75 lower to Rs 68.30 per share after declining nearly 20 per cent earlier in the session on Monday on the BSE.
It was Jet's 11th consecutive day of fall during which its shares have lost over 50 per cent of its value.
The lenders will now approach the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC) to recover their dues of about Rs 8,500 crore.
"A meeting of lenders was held today (Monday) to consider the way forward in respect of Jet Airways. After due deliberations, lenders have decided to seek resolution under IBC since only a conditional bid was received and requirement of the investor for SEBI exemptions and resolution of all creditors is possible under IBC," the SBI said in an official statement.
Lenders, led by the SBI, have been taking efforts to find a resolution for Jet Airways outside the IBC "but in view of the above, lenders have decided to seek a resolution within the IBC process," it added.
An official response from SBI spokesperson is awaited on the decision to start bankruptcy proceedings against the airline.
The key lenders to the airline met on Monday to chart out future course of action after they found the proposals received from prospective investor Etihad Airways and Hinduja Group unimpressive. They also rejected the conditions put forward by the Gulf carrier for infusing funds into the defunct carrier.
Besides offering to invest just Rs 1,700 crore against the requirement of Rs 15,000 crore to revive the crisis-hit airline, Etihad had, in its proposal, put the onus of finding majority buyer on lenders. It also wanted exemption from giving an open offer.
"The lenders found the conditions unacceptable," said a source.
Besides Rs 8,500 crore owed to PSU banks, the airline has a total liability of about Rs 25,000 crore which includes dues of operational creditors.
Running out of cash, Jet Airways had suspended its entire operations on April 17. Subsequently, the government re-allocated its slots and foreign traffic rights to rival carriers.
(Nirbhay Kumar can be contacted at firstname.lastname@example.org)
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