Troubles continue for Jet Airways as PNB alleges gross irregularity in RP's conduct

The troubles at Jet Airways show no signs of dying down. It has been close to a year since the Kalrock Capital-Jalan consortium won the bid to acquire the financially challenged airline. That double whammy saw it cease operations in April 2019. Once the dominant player in Indian skies now had to confront a new reality of its planes being grounded and an uncertain future.

When the consortium stepped in, eyebrows were raised since they had no prior experience of the aviation industry. At each stage, there have been hiccups but perhaps none more serious than what has just transpired. One of the lenders, Punjab National Bank (PNB), according to media reports, has alleged gross irregularity in the conduct of the resolution professional. It has also sought a stay on the Kalrock-Jalan plan in this insolvency and bankruptcy code (IBC) case.

Business Today learns that at least two officials representing Jalan, who is a Dubai-based entrepreneur (while Kalrock Capital is a London-headquartered asset management company), have been in Mumbai over the last few days meeting Jet Airways employees.

"They also spoke to the resolution professional in an attempt to mitigate the PNB crisis," says a company insider. The allegation from PNB is that they invoked the share pledge before the IBC. The resolution professional is said to have reduced the bank's debt by the value of invoked shares, state media reports.

Now, PNB wants its shares and their debt as well. This relates to a Rs 2,050 crore loan made by the bank in March 2019. With the value of equity going down to zero in an IBC plan, what will come PNB's way could well be negligible. By any stretch, there is many a hurdle before the consortium can hope to take control of the airline. With no clarity yet on parking slots, an issue that will come up sooner than later, it promises to be a long haul for an airline looking to regain some of the past glory.

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Also read: Jet staff seeks Jyotiraditya Scindia's help for resolution issues