Jet First Indian Company to Face Cross-Border Insolvency
In a major breakthrough for India's insolvency mechanism which is still in its evolving stage, Jet Airways would be the first Indian company to undergo insolvency proceedings under the Cross Border Insolvency Protocol along with the Insolvency and Bankruptcy Code (IBC) of India.
The National Company Law Appellate Tribunal (NCLAT) had allowed the Dutch court administrator of Jet Airways to attend the meetings of the bankrupt airline's Committee of Creditors (CoC). The resolution professional and the Dutch administrator, however, filed an application seeking an amendment in the September 26 order providing approval to the Dutch administrator, which the appellate tribunal accepted on Thursday.
The NCLAT's September 26 order had said: "Joint 'Corporate Insolvency Resolution Process' will continue in accordance with 'Insolvency and Bankruptcy Code, 2016'."
The appeal wanted the order to clarify that the resolution process would be carried on in accordance with 'Insolvency and Bankruptcy Code, 2016' and the 'Cross Border Insolvency Protocol', seeking the inclusion of 'Cross Border Insolvency Protocol' in the paragraph, along with 'Insolvency and Bankruptcy Code, 2016', which the bench accepted.
"We make it clear that the Dutch Trustee (Administrator) will work in cooperation with the 'Resolution Professional of India' and, if any, suggestion is required to be given, he may give it to the 'Resolution Professional'. The draft of 'Cross Border Insolvency Protocol' clause is made final as above," the order had said.
"It should be treated as a direction of this appellate tribunal and it would be mandatory to comply with the order of this Appellate Tribunal subject to the other procedures which are to be followed in terms of the 'Insolvency and Bankruptcy Code, 2016'."
The debt-ridden Jet Airways is facing insolvency proceedings in The Netherlands too. It was declared bankrupt there after it had failed to pay two European creditors. The Dutch court subsequently appointed a bankruptcy administrator.
The Mumbai bench of the National Company Law Tribunal (NCLT) had rejected the Dutch administrator's plea to recognise their proceedings, following which the administrator approached the NCLAT.
The grounded Jet Airways owes over Rs 8,000 crore to its lenders. Besides the lenders, the airline is estimated to have a total liability of about Rs 25,000 crore which includes dues of operational creditors.
Jet Airways, on April 17, announced the temporary suspension of all flight services as it failed to secure interim funding to maintain even the bare minimum operations.