State Bank of India (SBI) cites conditions sought by Etihad Airways in relation to its potential investment in grounded carrier Jet Airways as requiring it to move the process into insolvency proceedings.
SBI has been leading a consortium of lenders seeking to revive the cash-strapped carrier. But more than three months after the carrier's grounding and after struggling to secure new investment, the lenders on 17 June initiated proceedings for Jet within the country's insolvency and bankruptcy code (IBC)
Jet was grounded in March amid its mounting financial problems and the consortium launched a bid process to secure fresh investment in the carrier on 8 April.
In a stock market statement response to a request for clarification, SBI discloses that Etihad was one of four to express their interest alongside equity firms NIIF, TPG Capital and Indigo Partners.
When the deadline for firm bids closed on 10 May with no firm submissions, SBI says it began discussions with Etihad - an existing investor in Jet - and other prospective investors over "finding a way for infusion of funds".
"Etihad had sought certain relaxations viz.[sic] waiver of open offer, assurance of flying slots etc," it says. "As the lenders did not have any authority to accommodate some of the relaxations sought by Etihad, it was not considered feasible to negotiate on the conditions laid by Etihad.
"ln view of the above, since a sustainable Resolution Plan could not be devised and two operational creditors have already approached NCLT [National Company Law Tribunal], the member banks agreed in-principle, to approach NCLT, pursuant to the statutory right available to them under the lnsolvency & Bankruptcy Code," it says.
It confirms an application for Corporate lnsolvency Resolution Process (CIRP) was filed with NCLT on 17 June.
SBI adds: "Lenders have undertaken the instant CIRP against the company in the normal course of business and to protect their interest. lt may be further noted that initiation of instant lnsolvency proceedings is just a step for Resolution/Recovery under the statutory right available to the lenders."