The bank is only a lender to Jet Airways and not involved in or responsible for the management for the company and that the initiation of instant insolvency proceedings is just a way forward for the resolution/recovery under the statutory rights available to the lenders. This is what State Bank of India (SBI) asserted to Bombay Stock Exchange (BSE) in a letter recently.

So what led to the consortium of banks to approach National Company Law Tribunal (NCLT)? On June 18, BSE had raised queries with regards to the progress made in the Jet Airways resolution case. The SBI on June 19, replied to the query in detail.

The reply states that the banks were trying for a viable resolution for the last one year since Jet’s financial position was weak owing to operational losses. SBI Caps and McKinsey were roped in as process advisors.

SBI stated that as part of the bid process, the EOI (Expression of Interest) for investment in Jet Airways was sought from interested participants on April 8 and consequent to the advertisement, Etihad, NIIF, TPG Capital and Indigo partners expressed their interest on April 10, the very day when the bidding process was closed.

Subsequent to the closure of bids talks were held with Etihad and other prospective investors to find a way for the infusion of funds in Jet Airways.

The letter stated that Etihad had sought certain relaxations like waver of the open offer, assurance of flying slots and that the lenders had no authority to accommodate the relaxations sought by the Gulf carrier. The letter clearly stated that it was not considered feasible to negotiate on the conditions raised by Etihad.

Furthermore, SBI stated that since a sustainable plan couldn’t be devised and two operational creditors had already approached NCLT, the member banks in principle too agreed to seek resolution through the Insolvency and Bankruptcy Court (IBC).

Besides this, the letter stated that it is the responsibility of Jet Airways to disclose required information under regulation 30 of SEBI (Security and Exchange Board of India).

The letter concluded by saying that the lenders are not in a position to access/comment on the material impact the article may have. Lenders have undertaken the instant CIRP against the company in the normal course of business and to protect their interest.

SBI Chairman told India Today TV that NCLT was the last resort for the lenders. It may be noted that SEBI in March had tightened the takeover code for exemption from open offers, a decision that impacted Etihad Airways PJSC’s plans to invest in Jet Airways (India) Ltd. The exemption from making an open offer in case of acquisition of over 26 per cent in a listed company was after the change allowed only to banks, lenders and financial institutions.

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