After the Supreme Court of India decided not to challenge the National Company Law Appellate Tribunal’s (NCLAT) decision regarding the matter, Jet Airways is now facing a payment of millions to its former employees.
The airline is in the midst of a mission to clean up its financial mess to restore operations, but there have been several obstacles along the road.
The NCLAT had ordered Jet Airways to take on the burden of paying off ex-employee debts totaling tens of millions of dollars, and the Indian Supreme Court agreed with them.
The court recognized the necessity for “finality” in this case, according to reports, which cites a bench chaired by the Chief Justice as saying,
The consortium will also need to provide an additional $24.5 million to the payment, which could jeopardize the carrier’s resuscitation strategy as a whole, according to what he added.
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Employee compensation is a significant problem that has only made Jet Airways’ problems worse as it struggles to resume operations.
The issue of unpaid provident funds and gratuity dues of former Jet employees has been a point of contention among Jet’s creditors since November of last year.
As part of its resolution strategy, the Jalan-Kalrock Consortium had committed to spending 13.7 billion ($168 million). Of this, about $58 million was to be paid to the creditors, and the remaining $110 million was to be used as cash infusion. According to the authorities estimates, the present ex-employee liabilities are much higher than what Jet had budgeted for.
National Company Law Tribunal
The Jalan-Kalrock Consortium was given ownership of Jet Airways earlier this month after the National Company Law Tribunal (NCLT) gave its approval. This was in response to the consortium’s requests to grant two petitions—one to legalize the transfer of ownership and the other to prolong the deadline for paying creditors—both of which were filed. Jet was given a six-month extension to make the payments after its original due date of November 16th, 2022, even though it missed it.
However, Jet’s lenders appealed that decision to National Company Law Tribunal (NCLAT), requesting a stay of that decision because the consortium had not satisfied all requirement precedents, including obtaining domestic flight slots and international traffic rights.
Jet missed the deadline to resume flying last year, and the beginning of this year hasn’t been all that exciting either. It appears that more time is still needed before the airline’s future can be more clearly understood.
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