Business strategy

Standoff Over PF, Gratuity Dues Delay Jet Airways Revival

In a development that could delay the revival of Jet Airways, the Jalan-Kalrock consortium (JKC) that won the bid for resurrecting the airline said it will not make any additional payment over the Rs 475 crore approved in its Resolution Plan. The consortium said this in an application with the National Company Law Appellate Tribunal (NCLAT), according to a CNBC-TV18 report.

The report added that this application relates to an order dated October 21, in which NCLAT directed the consortium to make payment of unpaid PF and gratuity to workmen and employees of the airline until June 2019 when the insolvency process was initiated.

Resolution professional Ashish Chhawchharia was erstwhile asked by the court to compute these payments within a month and communicate the same to the consortium. The consortium has appealed to the court to clarify if the winning consortium has been directed to pay these dues.

The Jalan-Kalrock consortium, citing excerpts from the resolution plan, has said any additional payments over the approved Rs 475 crore should first be paid from the positive bank balance of Jet and the remaining from Rs 475 crore, which is reserved for various creditors, according to the CNBC-TV18 report.

JKC’s application in the NCLAT comes on November 16, which is also the deadline to pay upfront Rs 185 crore as the first tranche to lenders.

Earlier, reports said the Jalan-Kalrock consortium had two deadlines that were likely to be missed. First, the consortium had to pay Rs 52 crore to workmen and employees of the erstwhile airline by the end of business on November 11. CNBC-TV18 reported that this payment was not made. The second deadline has to do with the payment of Rs 185 crore to various lenders. The consortium had till November 16 to make this payment.

The consortium had committed to infuse Rs 900 crore towards capital expenditure and working capital. JKC has so far deposited only Rs 150 crore as a performance guarantee.

Recently, asset management firm Kalrock Capital Partners also said probes into its investor Florian Fritsch have no impact on its acquisition of Jet Airways. Fritsch is assisting in investigations by regulatory agencies in Liechtenstein, Switzerland, and Austria. Investigators in Austria, Liechtenstein and Switzerland last week raided properties linked to Florian Fritsch in connection with a money laundering probe.

The probes are based on anonymous complaints filed in relation to certain businesses where Fritsch is a financial investor in his personal capacity, UK-based Kalrock said in a statement.

In April, Sanjiv Kapoor, the CEO of Jet Airways, had said the airline is targetting to fly its aircrafts in the July-September quarter. In May, Jet Airways conducted its test flight to and from the Hyderabad airport in a step towards obtaining the air operator certificate. Jet Airways, which has not flown since April 17, 2019, is currently in the process of re-launching operations under its new promoters Jalan-Kalrock Consortium. The airline’s CEO Sanjiv Kapoor had said the test flight’s operation was a very emotional moment “for all the wonderful folks who have been working hard to get Jet back in the skies”.

Kalrock Capital and UAE-based businessman Murari Lal Jalan were selected by lenders to revive the grounded airline in October 2020.

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