It’s official-- Jet Airways is bankrupt, declares a Indian court on the same day the share price jumped 93%
- The National Company Law Tribunal admitted plea State Bank of India's (SBI) plea against Jet Airways.
- SBI and 26 lenders filed a case against Jet as per Insolvency and Bankruptcy Code (IBC).
- With a debt of over ₹85 billion, Jet was declared bankrupt by a court in The Netherlands.
A two-judge bench which heard the case of SBI and 26 other lenders, also directed an interim resolution professional to resolve the matter within three months.
In anticipation of a possible resolution to the airline’s crisis which was grounded in April 17, the stock of the company rallied today. It went up by 120% at one point, hitting the upper circuit. As the markets closed, it ended 93% higher than the closing price a day before.
The Bombay Stock Exchange sought a clarification from the company on the price increase.
Earlier this week, the lenders of the bank including State Bank of India, met to find a possible solution to stop it from going bankrupt. But they could find no viable option, leading it to National Company Law Tribunal (NCLT).
Jet Airways has been in debt of as much as ₹85 billion, due to making bets on expansion as competition in the aviation sector heightened. The increased costs of running an airline like aviation turbine fuel (ATF) also went up, deepening the crisis at the debt-ridden company.
After the company went belly up, two of its creditors, Shaman Wheels and Gagar Enterprises moved approached the insolvency court, to recover their dues.
In the meanwhile, the airline also owes salaries to its pilots and other staff and The National Aviators Guild has sent a notice demanding the same. The guild also threatened to join insolvency proceedings if they fail to pay up.
The airline however has been declared bankrupt in Netherlands by a court, where it owes money to two of its service providers. Rocco Mulder has been appointed as the administrator in the bankruptcy proceedings in the case told Business Standard that “the opening of insolvency proceedings in the Netherlands has universal effect”.
Jet Airways stock nearly doubled in a day as the rumour mill in the market goes berserk
Watching the Sensex can be misleading-- India's mid and small cap stocks have lost ₹2.4 trillion of investor wealth this year alone