Stressed assets this week: Spotlight turns on Jet Airways, Gitanjali Gems

By Beena Parmar

  • 18 Apr 2019
Stressed assets this week: Spotlight turns on Jet Airways, Gitanjali Gems
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Since the Insolvency and Bankruptcy Code (IBC) was passed in 2016, a little over Rs 1.42 lakh crore of claims have been recovered.

Till 28 February, 88 cases were heard under the IBC and a total of Rs 68,766 crore was recovered from those cases, data from the Insolvency and Bankruptcy Board of India (IBBI) showed.

Of the total admitted claims, financial creditors sought to recover dues worth Rs 1.36 lakh crore, getting back 48.24% of those claims. Operational creditors sought recovery of Rs 6,469 crore, receiving 48.41% of their admitted claims.


Of the 88 cases, the share of financial creditors and operational creditors stood at Rs 65,635 crore and Rs 3,131 crore, respectively, the data revealed.

In the third series of weekly round-ups on insolvency cases, we look at the top cases that made headlines this week. These include Jet Airways suspending its operations and Gitanjali Gems going bust.

Jet Airways grounded


As lenders rejected Jet Airways’ request for an emergency fund infusion, the carrier suspended all its domestic and international operations on Wednesday. It is now waiting for the lenders' consortium led by State Bank of India to assess the potential bids submitted by investors on 16 April.

The domestic carrier is burdened with more than Rs 8,000 crore of debt and is on the brink of bankruptcy with 23,000 jobs at stake.

Media reports have previously said that the four shortlisted investors include private equity firms TPG Capital and Indigo Partners, Indian sovereign wealth fund National Investment and Infrastructure Fund (NIIF) and the UAE's Etihad Airways, which already owns a minority stake in Jet.


Gitanjali Gems faces closure

In another notorious case, Gitanjali Gems Ltd, promoted by fugitive jeweller Mehul Choksi, is headed for liquidation after a majority of its lenders decided not to extend the 180-day period to complete its insolvency resolution process.


The 180-day period to complete the insolvency resolution process ended on April 6.

Gitanjali Gems promoter Choksi and his nephew Nirav Modi were at the centre of the $2-billion fraud at Punjab National Bank last year. The state-run bank had said at the time that two jewellery groups led by Modi and Choksi had raised credit from overseas branches of other Indian banks using illegal guarantees issued by rogue PNB staff over several years.

In October last year, the National Company Law Tribunal (NCLT) admitted the insolvency petition filed by ICICI Bank against Gitanjali Gems under the IBC. The lender has claimed dues of Rs 890.20 crore from Gitanjali Gems, with a 7.09% voting share in the committee of creditors


BILT Graphic Paper’s second run in insolvency court

Billionaire Uday Kotak-led Kotak Mahindra Bank approached the Mumbai bench of the National Company Law Tribunal against BILT Graphic Paper Products Ltd under the IBC in March for defaulting on loans worth Rs 218 crore.

Kotak Mahindra Bank is the second lender—after IDBI Bank—to move the NCLT against BILT Graphic, which owes about Rs 7,000 crore to its creditors.

BILT Graphic was on the Reserve Bank of India’s second list of 28 corporate defaulters referred for resolution under the bankruptcy law.

IDBI Bank approached the NCLT in February 2018, but the company contested the move in the Delhi High Court. The Delhi court ordered the bank to maintain status quo at the NCLT. Subsequently, the company also moved the Supreme Court, which is yet to hear the case.

A number of strategic and financial investors such as private equity firm TPG Capital; Arcion Revitalisation, the asset reconstruction company of AION Capital; IndiaRF, a joint venture between Piramal Enterprises and Bain Capital Credit; and JK Group’s LVP Foods have expressed interest to Delhi-based loss-making dairy products maker Kwality Dairy, a report in The Economic Times stated, citing two persons in the know.

A resolution plan for Kwality has to be submitted by May 15 and financial creditors are claiming dues worth Rs 2,100 crore, an official privy to the development told ET.

In October 2018, private equity firm KKR had filed insolvency proceedings against the firm after it had defaulted on loans worth Rs 1,200 crore. KKR had invested as much as Rs 520 crore ($77 million) in the dairy company two years ago .

Kwality Dairy posted a loss of Rs 1,500 crore in the quarter ended December 2018.

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