Jet Airways crisis: Bombay High Court refuses to rescue debt-laden carrier

Source:- businesstoday.in.

The Bombay High Court Thursday refused to intervene in the Jet Airways crisis, saying it cannot direct the government and the Reserve Bank of India to rescue a “sick company”.

A bench of Chief Justice Pradeep Nandrajog and Justice N M Jamdar dismissed a writ petition seeking the government and the central bank be asked to direct the consortium of banks help the cash-starved airline, which was grounded from Wednesday indefinitely.

Jet Airways’ last flight landed at the city airport past midnight from Amritsar and became the seventh carrier to shutter operations in the past five years.

The over 25-year-old airline had sought an Rs 400-crore emergency fund from its lenders to whom it already owes over Rs 8,500 crore, but was refused as the airline was not ready to offer more collaterals.

The writ petition, filed by advocate Mathew Nedumpara, sought among other things a direction to the government and the RBI to ensure that the airline resumes operations till a potential investor was identified.

SBI-led banks had invited bids for selling anywhere between 31 and 75 percent stake in the airline and have already received four initial bids from Jet Airways’ foreign partner Etihad Airways, the sovereign wealth fund NIIF, and two private equity funds–TPG Capital and Indigo Partners.

Jet Airways founder Naresh Goyal, who along with his wife Anita were forced out of the airline late last month by the banks, had also put in bids, but was asked to withdraw after the four bidders threatened to walk out. The banks hope to complete the sale process by May 10.

The market reacted badly to the shuttering and Jet stock tanked over 32 percent on the BSE against a 0.32 percent correction in the benchmark Sensex.

The company has put at stake over 20,000 jobs and owes money to millions of passengers following flight cancellations that began since January apart from owing thousands of crores to its vendors and suppliers.

The petitioner said the airline is an “essential service” and therefore, the court must pass orders directing banks, led by the State Bank of India, “to provide such bare minimal funds to Jet as required to keep its flights operational”.

The plea also sought the court direct RBI to convene a joint meeting of the banks and Jet management to take emergent steps to keep the airline afloat, during the completion of its ongoing stake sale process.

The bench, however, said it cannot ask the government or RBI to release funds for a sick company.

“We cannot ask the government to rescue a sick company. The only thing we can do is that if you get a hat, we can pass it around this courtroom for collecting money for charity,” the court said, dismissing the petition and advised the petitioner to approach the National Company Law Tribunal.