Thursday, January 09, 2020

Jet Airways insolvency: IDBI Bank and IOB say cant fund the process further

 The insolvency proceedings of grounded Jet Airways have hit yet another snag after two of its lenders, IDBI Bank and Indian Overseas Bank, on Wednesday sought an exemption from releasing funds as they are under the central bank’s prompt corrective action (PCA) framework.

The two banks’ plea coincided with NCLT’s warning to Jet CoC of contempt proceedings if they do not release interim funds to the resolution professional by January 20 for completion of insolvency proceedings.

“We again reiterate and instruct the constituents of CoC to forthwith release the amounts as required by the RP so that the process of corporate insolvency resolution process (CIRP) can be completed and the asset value (of Jet Airways) is protected,” said Justice Bhaskar Pantula Mohan, one of the member judges of the Mumbai-bench of NCLT. He also said pilots should be considered assets of the company and their interests should be protected.

IDBI Bank has filed an application with the NCLT seeking exemption from paying for Jet’s insolvency process. The bench directed both IDBI Bank and IOB to approach the RBI on the matter. “It is also directed that the CoC members who filed applications before this bench seeking exemption from further contribution of funds shall have to approach the relevant authorities to seek exemptions, so that they be able to contribute the necessary funds by the next date approved by this bench,” said Justice Mohan. The matter will be heard again on February 19.

Under the Reserve Bank of India’s guidelines, banks that have poor asset quality and capital base would come under the PCA framework. Banks under PCA are required to restrict their risk-weighted assets. Without adequate funding, all attempts to revive the cash-strapped airline could meet an abrupt end.
09/01/20 Anwesha Ganguly/Financial Express
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