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|Posted: Mon Aug 21, 2023 3:23 pm Post subject:
Sale of ex-Jet Airways B777s to Ace Aviation remains on hold
A bid by Malta's Ace Aviation VIII Ltd to buy three parked B777-300ERs belonging to Jet Airways has hit a roadblock after India's National Company Law Appellate Tribunal (NCLAT) declined to approve the transaction until the airline's ownership change is finalised.
ACE approached the appellate court after the Delhi bench of the National Company Law Tribunal (NCLT) rejected an application to purchase the planes in July. Counsel for ACE, Ritin Rai, told the courts a letter of intent to buy the aircraft for INR4 billion Indian rupees (USD48.1 million) had been signed by his client and the Jet Airways' creditor's committee, with a INR500 million (USD6 million) deposit already paid.
But both the NCLT and NCLAT agreed that the sale of the aircraft could not be considered until the ownership of the airline was settled. In late 2020, the Jalan-Kalrock consortium (JKC) won a bid to buy Jet Airways, which had ceased operations in 2019. In mid-2021, the NCLT approved a resolution plan, which would see the JKC pay creditors some of the monies owed to them and recapitalise the airline, in exchange for ownership transferring to them.
Owing to ongoing disputes between the creditor's committee and JKC, this process is yet to get underway, despite multiple interventions and time extensions from the NCLT. Most recently, the creditors' committee agreed to back down on a push to invalidate the resolution plan and wind up the airline if JKC paid them INR3.5 billion Indian rupees (USD42.2 million) by an August 31 deadline.
This particular matter relates to a successful bid in late 2022 by Ace Aviation VIII Ltd to buy three ex-Jet Airways B777s in an auction run by the Jet Airway's monitoring committee. According to a Business Standard report, a Belgian cargo airline - Challenge Airlines BE (X7, Liège) - owns the Ace Aviation VIII Ltd entity. The transaction was due to finalise by the end of 2022, with Ace paying the deposit. However, the Jet Airways' monitoring committee, which had managed the auction, reportedly stopped responding to communications from Ace.
Rai told the NCLAT last week that the JKC's resolution plan indicated they have no intention of using previous Jet Airways aircraft in any relaunch. But lawyers for the consortium were back in court earlier this year trying to block the sale. That legal bid culminated in July's NCLT ruling, which became the subject of this most recent appeal.
While the NCLAT has refused to entertain any aircraft ownership transfer application while ownership of the airline remains uncertain, the August 31 deadline for JKC to pay creditors is shaping up as crunch time. The consortium has recently said it can meet all financial commitments per the original resolution plan and is well capitalised. India's Directorate General of Civil Aviation recently re-issued it a temporary air operator's certificate to help clear some administrative hurdles the airline faces. The NCLAT has re-listed ACE's aircraft application for hearing on September 6, saying there should be more clarity on the airline's ownership by then.
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