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#Publications S&R Insights: From Rescue to Ruin - The Supreme Court’s Judgment in Jet Airways and the Future of Airline Insolvencies In a recent judgment, the Supreme Court of India ordered the liquidation of Jet Airways (India) Limited, bringing an end to the five-year-long saga of efforts to revive the distressed airline. Two years after the airline entered the corporate insolvency resolution process, the National Company Law Tribunal, in June 2021, approved the resolution plan submitted by the Jalan Fritsch Consortium, the successful resolution applicant. However, various challenges arose with implementation of the resolution plan, which led the successful resolution applicant to seek multiple extensions and concessions from the adjudicating authority. Finally, the Supreme Court set aside the March 2024 order of the National Company Law Appellate Tribunal and used its inherent powers under Article 142 of the Constitution to order the airline’s liquidation. The Supreme Court’s judgment is significant as it underscores the importance of implementing resolution plans within agreed upon timelines and identifies certain gaps and shortcomings in the Insolvency and Bankruptcy Code, 2016 as far as implementation of resolution plans are concerned. This note analyzes the judgment to discuss its implications for the implementation of resolution plans as well as specific challenges in the context of insolvencies in the aviation industry. Authored by Aparna Ravi and K J Chendhil Kumar. #aviation #insolvency #IBC #regulatory #india #lawyers

We are thrilled to announce a landmark victory in the Delhi High Court in the matter of de-registration of Aircrafts of Go Airlines despite the commencement of their insolvency proceedings before the NCLT. Following our recommendation, our clients pursued action under the High Court's Writ Jurisdiction, making us the first to petition the High Court for de-registration. The Hon'ble High Court has, inter alia, held that NCLT has no power to de-register the Aircrafts; Section 14(1)(d) cannot be used as a shield to retain possession when termination is prior to commencement of moratorium.  This judgment sets a decisive precedent for insolvency as well as aviation law in India. Advocates: Ankur Mahindro, Rohan Taneja and Aditya Kapur #disputeresolution #delhihighcourt #insolvency #goair #legalupdates #lawfirm

The Aviation Working Group has released its semi-annual 2024 update of the Cape Town Compliance Index. Previously, India was issued with 6 watchlist notices in relation to the GoFirst insolvency proceedings which severely impacted the score. However, on a positive note, India has now been removed from the CTC compliance index watchlist as the compliance-related action has concluded. The score for India has increased from 50 to 61. According to the attached scoring adjustment notice, “Committed educational efforts and judicial practice reforms are needed to fully address materially non-compliant action present in the GoFirst insolvency proceedings. Nevertheless, the compliant High Court decision has a positive impact on CTC compliance in India, predicated on the binding nature of the decision on lower courts in India.” #sarinlaw #avgeek

Supreme Court Orders Liquidation of Jet Airways: Upholding the Integrity of the IBC In a landmark judgment, the Supreme Court of India has directed the liquidation of Jet Airways (India) Limited, marking a decisive outcome in the airline's prolonged insolvency proceedings. This verdict, while disappointing for those anticipating the airline's revival under the Jalan-Kalrock Consortium (SRA), underscores the Court's commitment to upholding the principles and objectives of the Insolvency and Bankruptcy Code (IBC). Central Tenets of the Judgment: * Sanctity of the Resolution Plan: The Court unequivocally emphasized the binding nature of the approved resolution plan, rejecting any deviation from its terms, including the stipulated timelines for payment obligations. * Time-Bound Resolution: The judgment underscored the critical importance of timeliness in insolvency resolution, expressing concern over the inordinate delays that plagued the Jet Airways case. * Commercial Wisdom of the CoC: The Court reaffirmed the importance of respecting the commercial decisions of the Committee of Creditors (CoC), recognizing their expertise and informed decision-making. Shortcomings and Recommendations: The Jet Airways case has illuminated certain deficiencies in the IBC framework, prompting the Court to offer recommendations for its improvement. These include: * Enhanced Supervision of Resolution Plans: The Court proposed statutory provisions for the mandatory constitution of a Monitoring Committee to supervise the implementation of resolution plans, ensuring greater accountability and transparency. * Strengthening the NCLTs and NCLAT: The Court expressed concerns about the functioning of these tribunals, suggesting measures to improve their efficiency, expertise, and adherence to judicial orders. A Balanced Perspective: While acknowledging the setback for the SRA and those hoping for Jet Airways' revival, the judgment prioritizes the integrity and effectiveness of the IBC framework. It serves as a potent reminder of the importance of timely resolution, strict adherence to the approved resolution plan, and the sanctity of the CoC's commercial wisdom. Implications for the Insolvency Ecosystem: This judgment is poised to have a far-reaching impact on the Indian insolvency landscape. It clarifies the expectations and responsibilities of all stakeholders involved in insolvency resolution, emphasizing the need for ethical conduct, timely action, and a commitment to the objectives of the IBC. #IBC #Insolvency #JetAirways #SupremeCourt #CorporateLaw

Supreme Court Overturns Jet Airways Revival Plan. Jet Airways’ revival plan faces a major setback as the Supreme Court invalidates the JKC-led resolution. 🔹 SC Nullifies JKC's Plan: The Supreme Court overturned the National Company Law Appellate Tribunal's (NCLAT) approval of Jet Airways' ownership transfer to the Jalan-Kalrock Consortium (JKC). 🔹 Missed Financial Milestone: The ruling was based on JKC’s failure to provide the first tranche of funds as outlined in the plan. SBI and other creditors appealed, raising concerns over the consortium’s commitment. 🔹 Misuse of Bank Guarantee: The SC criticized NCLAT’s approval for JKC to adjust the initial ₹350 crore payment against a Performance Bank Guarantee (PBG), calling it a "flagrant disregard" of a previous Supreme Court order from January 18. 🔹 A Long Road Since 2019: Jet Airways halted operations in 2019 due to severe financial issues. The airline was admitted to the insolvency process after SBI initiated proceedings, leading to JKC’s selection in 2021 to bring the airline back. This decision raises critical questions about the future of Jet Airways and the path forward for creditors and stakeholders involved. #JetAirways #Bankruptcy #SupremeCourt #Aviation #CorporateLaw #Insolvency #ResolutionPlan #FinancialNews #JKC #CreditorsRights #IndianAviation #BusinessLaw #SCVerdict #NCLAT #BankingSector #DebtResolution #BusinessUpdate #JetRevival #AviationIndustry #CorporateUpdate #FinanceNews #IndiaEconomy #SCJudgment #AviationNews #InsolvencyLaw #AirlineRestructuring

NCLT Mumbai: Third Parties Must Release Corporate Debtor's Assets for CIRP The National Company Law Tribunal (NCLT) Mumbai bench, comprising Justice V.G. Bisht (Retd.) and Mr. Prabhat Kumar, ruled that assets of the Corporate Debtor (CD) held by third parties must be released to the Resolution Professional (RP) for the resolution and revival of the CD. Charge holders may file claims in the appropriate class if they believe they hold a charge over such assets. Background: In 2017, TWC Aviation Capital Limited (Creditor) leased two engines to Jet Lite (India) Limited, with Jet Airways (India) Limited (Corporate Debtor) providing a guarantee. After repossession of the aircraft by the Creditor, the Corporate Debtor's engine remained attached and was later leased to SpiceJet. The RP sought the return of this engine and related payments. Contentions: Creditor: Claimed a lien over the engine due to incurred costs. Resolution Professional: Asserted the creditor's claim had been admitted in the resolution plan, prohibiting further claims against the CD's assets. Verdict: NCLT Mumbai ruled in favor of the RP, directing the return of the engine to the Corporate Debtor, rejecting the creditor's lien, and ordering payment of usage charges. The Tribunal emphasized that assets of the CD held by third parties must be released for effective resolution and revival. Case Title: Mr. Ashish Chhawchharia, RP of Jet Airways (India) Limited vs. TWC Aviation Capital Limited and Ors. Case No.: IA No. 342/MB/C-I/2021 in C.P (IB) No.2205/MB/C-I/2019 Date of Judgment: 24th June, 2024 #InsolvencyLaw #CorporateDebtor #NCLT #IBC #JetAirways

The recent High Court decision in favor of the lessor regarding the Go First aircraft repossession case marks a significant milestone in aviation lease disputes. This ruling underscores the judiciary’s support for contractual obligations and creditor rights under current aviation and insolvency laws. The question now is whether the RP, appointed to oversee the restructuring process under bankruptcy proceedings, will abide by this judgment or opt to escalate the matter to the Supreme Court. It is crucial for the integrity of the insolvency process that the RP respects this decision. Adhering to the court’s directive not only facilitates a smoother resolution to this complex case but also sets a precedent for future lease disputes. This is particularly important in maintaining lessee-lender relationships and ensuring that similar cases are handled with the required judicial deference. Compliance with the High Court’s decision to return the aircraft would demonstrate a commitment to upholding lawful agreements and the judicious use of insolvency frameworks #aviation #india #gofirst #lessor #airline

In the recent decision to order Jet Airways' liquidation, the Supreme Court strongly criticized the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) for inefficiencies and non-compliance with judicial norms. The bench, led by Chief Justice of India DY Chandrachud and Justices JB Pardiwala and Manoj Misra, voiced serious concerns about the Tribunals' operations and underscored the need for members with "impeccable integrity" who are free from political influence. Justice Pardiwala's judgment highlighted multiple issues, including: 1. Tribunal Efficiency and Domain Knowledge: The Court observed that NCLT and NCLAT members often lack the expertise to handle complex insolvency cases, which require extensive legal knowledge and attention to detail. The Tribunals were also criticized for not adhering to full working hours, leading to delays in insolvency resolutions. 2. Judicial Discipline: A strong admonition was directed at the Tribunals for disregarding Supreme Court orders, warning that future acts of defiance would not be tolerated. The Court reminded members of their responsibility to uphold judicial propriety and prioritize timely case hearings. 3. Listing and Infrastructure Issues: The judgment flagged flaws in listing practices, noting that urgent insolvency matters often go unaddressed, causing financial losses as asset values erode. The Court also > criticized the persistent vacancies and inadequate infrastructure, which hinder timely resolutions as per the Insolvency and Bankruptcy Code (IBC), 2016. The Supreme Court's ruling emphasizes that to achieve effective insolvency resolution, Tribunals need competent members with a commitment to efficiency and judicial discipline. The case, *State Bank of India and Ors. v. The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch and Anr.,* underscores the judiciary's call for improvements in the functioning of these Tribunals and adherence to legal protocols. #JetAirways #SupremeCourtOfIndia #IndiaLegalSystem #IndianLegalSystem #LegalIndia #Litigations #Lawyers #Advocates #Judgements #IndianLegal #LawIndia #IndiaLaw #CaseLaw

#ETLegalWorldExclusive | The Supreme Court, deeming the Jet Airways insolvency case an "eye-opener," emphasized the need for strengthening India's Insolvency and Bankruptcy Code (IBC). Highlighting the sanctity of the Committee of Creditors' decisions, the court urged timely implementation of resolution plans and efficient functioning of insolvency tribunals. Read more at: https://lnkd.in/gYksAw8p #ETLegalWorld #JetAirways