Mumbai: When the National Company Law Tribunal (NCLT) cleared Jet Airways' resolution plan last month to pave the way for its revival, the airline staff were joyous. “There was excitement and great hope of revival. The staffers’ claims, at least the statutory due such as gratuity will be paid and Jet will rise like a Phoenix,” said Dr N Hariharan, former senior vice-president, HR, at Jet Airways and a visiting professor at TISS.
But when the 59-page NCLT order was released, the staff learnt that Kalrock-Jalan consortium’s resolution plan had proposed a lump sum of Rs 52 crore, 4% of the Rs 1,254 crore claims admitted by Jet’s resolution professional—the official who manages the entire process of insolvency and bankruptcy, that is. The 13,800-odd Jet staffers’ provident fund and gratuity add up to about Rs 280 crore, said sources, implying that the amount proposed to be paid by the consortium doesn’t cover even the statutory dues.
The only hope now before Jet staffers is liquidation value —the estimated realizable value of Jet Airways assets on the insolvency commencement date—owed to them. This week, in a letter sent to the staff, the now erstwhile resolution professional said if the liquidation value owed to Jet workmen and employees is not “nil”, then that amount shall be paid to them, in priority over financial creditors (banks).
An advocate, requesting anonymity, said: “The two safeguards under insolvency and bankruptcy code (IBC) for workmen and employees is that they will at least get the liquidation value owed to them and it will be paid in priority. But in most cases, the liquidation value owed to staffers is either nil or not much. The banks get the biggest chunk, and rightly so. The workers’ dues are left to the mercy of the resolution applicant and committee of creditors (Kalrock-Jalan and banks led by SBI, in Jet’s case).” An insolvency resolution under the IBC is a creditor-driven process, the advocate said, adding that workmen and employees don’t have a say in how their dues will be handled in the resolution plan. The possibility of the liquidation value due to Jet staffers being large enough to cover their gratuity and PF dues is almost zero, he added.
14/07/21 Times of India
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