Jet Airways crisis: Lenders to meet today to finalise resolution for debt-laden airline; shares plunge over 18%
Last week, the I-T Department summoned Naresh Goyal, the founder of Jet Airways, for questioning in connection with an alleged tax evasion case.
The I-T Department reportedly found anomalies in the deals between Jet Airways and its Dubai-based group firms
The shares of Jet Airways continued the downward trend, plunging over 18 percent on Monday
Stock exchanges will impose restrictions on trading in Jet Airways shares from June 28
After the Hinduja Group and Etihad Airways reconsidered their decision to invest in Jet Airways dashing hopes of its revival, the lenders to the crisis-hit airline are meeting today to finalise the resolution of the now-grounded airline, said a media report.
The lenders are meeting to finalise how a resolution could be worked out under the 7 June mandate of the Reserve Bank of India (RBI) on stressed assets, according to The Economic Times citing three bankers in the know of the matter.
Accordingly, the lenders led by State Bank of India (SBI) will have to decide if the rescue of the debt-laden airline is still possible or will it have to be taken to the bankruptcy court, said the report.
SpiceJet chairman Ajay Singh said one of the reasons for the decline of the beleagured airline was the tax system with its tax structure and regulatory process, reported The Economic Times.
"We need to understand that flying is not only for the rich—and schemes like UDAN and others have proved that —and should not be taxed heavily," Singh was quoted as saying in the report.
Last week, the Income Tax (I-T) Department had summoned Naresh Goyal, the founder of Jet Airways, for questioning in connection with an alleged tax evasion case, reported Business Today.
The I-T Department reportedly found anomalies in the deals between Jet Airways and its Dubai-based group firms to evade taxes to the tune of Rs 650 crore, the report said.
Meanwhile, the shares of Jet Airways continued the downward trend, plunging over 18 percent on Monday as stock exchanges, last week, decided to impose restrictions on its stock trading from 28 June, reported PTI.
The scrip which has been tumbling for the 11th consecutive day plummeted further 18.28 percent to hit a multi-year low of 67.05 on the BSE.
At NSE, shares plunged 17.94 percent to a multi-year low of Rs 67.
In 11 trading days, the scrip has tumbled over 55 percent from Rs 150.85 on 30 May.
Stock exchanges will impose restrictions on trading in Jet Airways shares from 28 June as part of preventive surveillance measures to curb excessive volatility, according to a circular issued last week.
In a circular on Wednesday, NSE said shares of the company would be shifted from "Rolling Segment to Trade for Trade Segment, wherein the settlement in the scrip will take place on gross basis with 100 percent upfront margin and 5 percent price band".
There are restrictions in trading of shares that are under Trade for Trade Segment.
Last week, London-based Hinduja Group reportedly decided to halt negotiations for buying a stake in the now-grounded Jet Airways while Abu Dhabi-based Etihad Airways put its plan on hold to invest further.
The decision that forced the Hinduja Group's was reportedly the ongoing government investigations into Jet Airways and insolvency pleas submitted by its creditors. These decisions virtually dashed the hopes of reviving the debt-laden airline.
Last Monday, two operational creditors—Shaman Wheels and Gaggar Enterprises—moved the National Company Law Tribunal (NCLT) seeking bankruptcy proceedings against the airline.
Rishabh Seth of Mumbai-based Shaman Wheels said his company had moved the NCLT after Jet Airways defaulted on dues of around Rs 6.82 crore. Ahmedabad-based Gaggar Enterprises used to supply packaged drinking water to the crisis-hit airline.
The tribunal issued notices to Jet Airways and banks, which own the airline now.
The NCLT on Thursday adjourned the hearing on Jet Airways insolvency case to 20 June. Asking the two operational creditors to again serve legal notices to the grounded airline, the tribunal is yet to admit the bankruptcy pleas.
Jet Airways owes more than Rs 8,000 crore to a consortium of banks led by the State Bank of India, which now run the airline, while it has a much larger debt pile by way of accumulated losses to the tune of Rs 13,000 crore and vendor dues of over Rs 10,000 crore and salary dues of over Rs 3,000 crore.
The banks have appointed SBI Capital Markets as the investment banker to find an investor to scout an investor for the company.
The cash-starved airline suspended operations on 17 April due to an acute liquidity crunch.
— With PTI inputs