Jet Airways shut down its operations temporarily on 17th April of 2019. The shutting down of the company affected their 20,000 employees and more than 60,000 people indirectly. Jet was the second-largest airline by passengers till January this year in the domestic market and was also flying more passengers than national carrier Air India to overseas destinations from India.
The company is reportedly in a debt of default of Rs 8,000 crores. SBI the lead lender and biggest state run bank has decided to change the management and stake sale in the beleaguered airline have opted for calling Expression of Interest (EOI).
Assuming that Jet goes for insolvency, some of the issues that shall crop with respect to first time this Code being tested on airlines and this business being one of the unique nature wherein the model is asset-light and not much is in the hands of company. Let’s analyse the challenges which shall arise under Corporate Insolvency Resolution Process (CIRP).
In the nature of airline business, most of the bookings are advanced and hence the customers are liable to get refund of the payment done. Usually, customers take two way tickets and also on the international routes where the return tickets are booked well in advance. The advance amount paid by the customers shall be classified as ‘financial creditors’ or ‘operational creditors’ shall also be a matter of debate.
14/05/19 Nipun Singhvi, Vishal J Dave/Economic Times
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The company is reportedly in a debt of default of Rs 8,000 crores. SBI the lead lender and biggest state run bank has decided to change the management and stake sale in the beleaguered airline have opted for calling Expression of Interest (EOI).
Assuming that Jet goes for insolvency, some of the issues that shall crop with respect to first time this Code being tested on airlines and this business being one of the unique nature wherein the model is asset-light and not much is in the hands of company. Let’s analyse the challenges which shall arise under Corporate Insolvency Resolution Process (CIRP).
In the nature of airline business, most of the bookings are advanced and hence the customers are liable to get refund of the payment done. Usually, customers take two way tickets and also on the international routes where the return tickets are booked well in advance. The advance amount paid by the customers shall be classified as ‘financial creditors’ or ‘operational creditors’ shall also be a matter of debate.
14/05/19 Nipun Singhvi, Vishal J Dave/Economic Times
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