Is there a need for a separate bankruptcy resolution process involving airlines? Lessons from Jet Airways

The insolvency resolution process for continued for over two years before reaching a conclusion with the Kalrock-Jalan consortium getting the NCLT nod.

However, their offer has left the employees seething as they waited for two years on the status of their employment.

The resolution plan has been challenged in NCLAT by the employee associations of Jet Airways on the grounds of lack of clarity over pending salalries and retirement benefits.

“Jet Airways resolution process began over two years ago in mid-2019. That’s a long time to keep thousands of employees on tenterhooks about their employment. In any IBC case that involves companies with a lot of employees, fast-tracking the process would mean clarity on their job prospects early on in the process,” a Times of India report quoted Sudip Mahapatra, partner S&R Associates, a law firm as saying.

“Airline consumers react to insolvency, people stop booking air tickets. If the airline has suspended operations, like in the case of Jet Airways, then the airport slots, the key asset for an airline, aren’t protected. IBC is a long process involving a year or two. Whether airline bankruptcies should be handled through a separate fast track process under IBC is the question. In an ideal world, a pre-packaged insolvency process that is completed in 60-90 days to allow the new owners to take over or restart operations would be better suited for the airline business,” Mahapatra added.

“Except for licence, what is the value left,’’ the ToI report quoted aviation expert Parvez Damani as saying referring to the airport slots. “How can the government hold on to the slots forever. If the slots are given away to other airlines, why would they give them back? I’m not confident in the whole Jet revival process.”

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