IndiGo Airlines wants to bid for grounded Jet Airways' assets and slots

IndiGo Airlines is interested in bidding for some of the assets as well as slots of Jet Airways. However, it has ruled out acquiring the Naresh Goyal-founded airline, which closed operations in April and is now under the insolvency process.  

According to Section 29 of the Insolvency and Bankruptcy Board of India (IBBI) Regulations, any resolution professional (RP) has the powers to sell unencumbered assets of the corporate debtor “if he’s of the opinion that such a sale is necessary for a better realisation of value”.  But the rider is that it can be done only if the book value of all assets sold during corporate insolvency resolution process period in aggregate “does not exceed 10 per cent of the total claims admitted by the interim resolution professional.” A sale of assets under this regulation has to get approval from the committee of creditors (CoC). It also implies that the RP and the CoC can sell some of the assets even without going for liquidation.  

Otherwise, a company’s assets can be sold only once it gets into liquidation and if no buyers are found. 

In the case of Jet, the RP has received claims to the tune of Rs 24,887 crore, including on loans given by the consortium of bankers led by State Bank of India. 

A source close to IndiGo Airlines, confirming the company’s interest, said, “We might look at the assets of Jet as well as its slots, if it is permitted. We are not interested in buying the company”.   

With the firm being referred to the National Company Law Tribunal (NCLT), Ashish Chhawchharia from Grant Thornton has been appointed  RP. The deadline for receiving expressions of interest (EoI) from interested parties is August 3.  

According to a Grant Thornton report, Jet’s assets include three B737 planes and a 49.9 per cent stake in Jet Privilege (JPPL) — the airline’s loyalty and frequent flyer subsidiary which made a profit of Rs 129 crore in FY18.

The remaining 50.1 per cent stake in JPPL is with Abu Dhabi-based Etihad.  Jet also has slots across domestic and international airports including in London, Singapore, Hong Kong and Amsterdam amongst others. The slots have been temporarily allocated  to other competing airlines till September 30.

The allocation of slots is governed by the guidelines of the aviation ministry for domestic slots and IATA (International Air Transport Association) for international slots.

When Jet was operational, it had one third of the Mumbai flying slots and a fifth of the Delhi slots, according to the the report.  Section 29 of the bankruptcy regulations has been used in other cases too like Aircel, where AION Capital and Airtel bid for the fibre assets of the company.

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