Jet Lenders are Requesting that the JKC Produce a Flying Permit

By Consultants Review Team Wednesday, 22 November 2023

New Delhi: Jet Airways' lenders, backed by the State Bank of India, have requested that the Jalan-Kalrock Consortium (JKC), the airline's victorious bidder, show the appropriate Air Operator Certificate (AOC). The AOC request, which is required for flying operations, was made at a hearing at the National Company Law Appellate Tribunal (NCLAT) involving the airline's Committee of Creditors (CoC), which has challenged the ownership transfer to JKC. The lenders' emphasis on the AOC emphasizes the requirements for resuming operations. They anticipate that JKC will offer the certificate at the next hearing as proof of their intention to resurrect Jet Airways.

Lenders had previously expressed concerns about JKC's funding sources and possible money laundering activities, particularly concerning investor Florian Fritsch, who is being investigated for fraud by European entities. The hearing has been rescheduled for December 11th, with the court emphasizing that no additional delays will be accepted, and the matter will be prioritized on that date.

In July, the Directorate General of Civil Aviation (DGCA) granted Jet Airways a conditional extension of its AOC until September 3, with the purpose of aiding the Corporate Insolvency Resolution Process (CIRP). JKC claims that the flying permission is in place and will remain so until the consortium begins air operations.

The lenders' counsel, Additional Solicitor General N Venkataraman, described the case's intricacies, citing JKC's ongoing legal maneuverings, such as their request for the restoration of a 200 crore deposit and simultaneous Supreme Court petitions for an urgent hearing.

According to JKC, the funds are being sought for equity issuance in the airline, which the lenders have yet to finalize. JKC said on September 29 that it has completed its financial commitment of 350 crore, and the new owners want to relaunch the airline in 2024.

JKC had finalized the transfer of funds to the lenders under NCLAT's direction. JKC was due to pay the lenders 200 crore under the payment schedule approved by the NCLAT on August 28. The NCLAT had ordered them to pay the due amount of 350 crore by September 30, with 150 crore encashed from the performance bank guarantee. 

On October 4, lenders expressed concerns about the consortium's funding source, implying possible money laundering. Jet Airways ceased operations in April 2019 due to financial concerns. However, the ownership transfer has been put on hold due to ongoing disagreements between the lenders and the consortium. The NCLT approved Jet Airways' resolution plan on June 22, 2021.


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