Supreme Court Orders Liquidation of Jet Airways

In a historic decision, the Hon’ble Supreme Court of India ordered the liquidation of Jet Airways (India) Ltd., marking the conclusion of a five-year-long saga involving one of India’s most prominent airlines. The verdict in State Bank of India & Ors. v The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr, [2024 SCC OnLine SC 3187], dated November 7, 2024, underscores the critical importance of strict adherence to provisions of the Insolvency and Bankruptcy Code (IBC), 2016 and the timely implementation of resolution plans.

Jet Airways, once a pioneer in India’s aviation sector, was incorporated on April 1, 1992, by Naresh Goyal. However, the airline’s fall from grace began in 2019 when it defaulted on payments to creditors, prompting the State Bank of India (SBI) to initiate insolvency proceedings under Section 7 of the IBC, 2016.

On June 22, 2021, the National Company Law Tribunal (NCLT) approved the resolution plan submitted by the Jalan Fritsch Consortium, the successful resolution applicant (“SRA“), following approval from the Committee of Creditors (“CoC“). Despite the plan’s approval, challenges continued to emerge in its implementation.

The case eventually reached the Hon’ble Supreme Court of India, which, in its January 18, 2024, judgment, held that the PBG could not be adjusted against the payment and had to be kept alive until the complete implementation of the plan, as per Regulation 36B(4A) of the Corporate Insolvency Resolution Process (CIRP) Regulations, 2016. It directed the SRA to fulfil the payment obligation by January 31, 2024. The SRA, however, deposited only Rs 200 crore instead of the full amount, leading the lenders to appeal again to the Hon’ble Supreme Court of India, eventually resulting in the Hon’ble Supreme Court of India’s final decision to liquidate Jet Airways under Section 33(3) of the IBC.