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Twist in Jet Airways tale: Shadow of Dutch bankruptcy proceedings on sale process

jet airways, aviation sector, aviation industry

By Mitali Salian & Anwesha Ganguly

The uncertainty regarding the sale of Jet Airways (India) grew on Wednesday as its lenders were in a fix over the bankruptcy proceedings initiated against the airline in a court based in North Holland last week. The State Bank of India-led consortium of lenders, which is now in control of the defunct airline, is conducting legal consultations to understand the implication of their plan to take possession of several Jet aircraft by paying off the airline’s debt to US Exim Bank, two officials aware of the developments said.

We haven’t entirely given up on the idea of taking control of some of Jet’s aircraft. However, given that we are talking about three different geographies, and three different areas of jurisdiction the Netherlands, India and the US, we are currently seeking legal advice on the impact of the bankruptcy proceedings against Jet at a Dutch court of law, one senior banker said on the condition of anonymity.

According to media reports, two European parties, including World Flight Services, approached a court in the Netherlands over pending dues from Jet Airways. The court has reportedly ordered seizure of one of Jet’s Boeing 777 aircraft that was parked in the Schiphol airport in Amsterdam.

The issue is, the proceedings were initiated in the Netherlands, it has to be vetted by lawyers here in India. Lenders are taking legal advice and studying how this will impact the sale process for the airline, another official said.

An email to representatives of World Flight Services and the Dutch government went unanswered until the time of going to press. The proceedings could likely be a dampener on the ongoing talks between the Hinduja Group and Etihad Airways regarding the sale of Jet Airways. The two parties are yet to approach the lenders with a proposal to buy the airline, the official said. Lenders have not been inclined to consider unsolicited bids, he added.

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FE earlier reported that lenders may take the airline to the National Company Law Tribunal if no serious bidder emerges in coming few days.

The lenders had initiated the sale of Jet Airways in April, after the airline failed to meet its debt obligations. Abu Dhabi-based Etihad Airways, a strategic partner of Jet Airways, was the only party to show any interest.
Jet Airways halted operations on April 17 after lenders had rejected its request to provide emergency funding. The civil aviation ministry has allotted a significant portion of the airline’s slots in major airports to other scheduled carriers. Matters complicated further for the airline with the series of resignations from the top management since May 13.