Insolvency proceedings against Jet Airways are likely to begin this week as a consortium of lenders led by the State Bank of India (SBI) failed to find a buyer for the beleaguered airline.
The National Company Law Tribunal (NCLT) could hear insolvency petitions filed by the airline's operational creditors for recovery of dues on June 20, reports said.
On Monday, the consortium of lenders decided to begin insolvency proceedings against Jet Airways as the SBI had received only a conditional bid, subject to lenders arranging for regulatory exemption on an open offer.
Further, Etihad expected the banks to write off most of its loans to Jet. As the grounded airline's assets are inadequate, lenders are worried about a significant haircut. Besides Jet's shareholder Etihad, the Hinduja Group was among those interested in buying a stake in the airline but the talks did not lead anywhere.
SBI said in a statement: "A meeting of lenders was held today to consider the way forward in respect of Jet Airways. After due deliberations, lenders have decided to seek resolution under the Insolvency and Bankruptcy Code 2016 (IBC) since only a conditional bid was received and requirement of the investor for SEBI exemptions and resolution of all creditors is possible under IBC."
It added: "Lenders led by SBI have been making efforts to find a resolution for Jet Airways outside IBC but in view of the above, lenders have decided to seek a resolution within the IBC process."
Jet Airways shut operations on April 17 owing to a severe liquidity crunch, leaving thousands of employees jobless. It was burdened with outstanding loans of Rs 8,500 crore and liabilities worth Rs 25,000 crore. In recent weeks, SBI repeatedly said that insolvency is not a preferred option, but only a last resort as recoverability in the airline business is difficult from a bankrupt organisation.