India

India’s Jet Airways is constantly engaging with the government and lenders for a resolution of the current debt crisis and will not leave any stone unturned to revive the airline, its chief executive officer Vinay Dube told television channel ET Now in an interview.

A forensic audit of 200 top companies by the Ministry of Corporate Affairs has detected irregularities to the tune of Rs 1 lakh crore, including diversion of funds. Most of these companies have been referred to insolvency and resolution proceedings under the Insolvency and Bankruptcy Code. Irregularities detected in some top companies point to the collapse of corporate governance structures leading to liquidity stress in these entities.

Thousands of employees have been stung by the rapid unraveling of Jet Airways, which, saddled with more than $1.2 billion in bank debt, grounded all its planes on Wednesday after lenders rejected a plea for emergency funds, Reuters reported. The shutdown has deepened the crisis as dues to lessors, staff and suppliers pile up and lenders scramble to find a buyer for what was once India’s largest private airline. Jet Airways CEO Vinay Dube told employees on Wednesday that the sale would take time and could throw up more challenges, but he was confident the airline would fly again.

Embattled Jet Airways halted all flight operations indefinitely on Wednesday after its lenders rejected its plea for emergency funds, potentially bringing the curtains down on what was once India’s largest private airline, Reuters reported. The carrier, saddled with roughly $1.2 billion of bank debt, has been teetering for weeks after failing to receive a stop-gap loan of about $217 million from its lenders, as part of a rescue deal agreed in late March.

The Ministry of Corporate Affairs (MCA) on Tuesday invited comments from stakeholders on “pre-packaged” insolvency resolution and insolvency resolution for group companies among other issues related to the Insolvency and Bankruptcy Code (IBC), 2016, and the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the Indian Express reported. In March this year, the government had reconstituted the Insolvency Law Committee as a standing committee, chaired by MCA Secretary Injeti Srinivas, to analyse the functioning and implementation of IBC.

Jet Airways pilots announced on Sunday that they would go on strike over unpaid salaries, heaping more pressure on the cash-strapped Indian carrier to find a new owner to bail it out, the Financial Times reported. The airline is saddled with more than $1.2bn debt and has not been able to pay pilots their salaries for over three months. It left passengers around the world stranded on Thursday when it cancelled its international flights. The carrier is down to fewer than 10 operational aeroplanes out of a fleet of 123, raising fears of an imminent shutdown.

ArcelorMittal’s plan to buy a bankrupt Indian steel company for $6 billion was halted temporarily by the nation’s top court, further delaying tycoon Lakshmi Mittal’s efforts to enter the world’s second-biggest market, Bloomberg News reported. The Supreme Court ruled that Essar Steel India Ltd.’s current status has to be maintained, pending a review by a bankruptcy tribunal hearing appeals related to the sale. The company is currently being managed by a court-appointed administrator.

India will probably see more bank mergers as digital technology transforms the industry and non-bank financing companies seek to avoid a cash crunch, according to a senior official at the nation’s largest lender, Bloomberg News reported. Finance firms that don’t take deposits “need a stable source of capital and banks can help with that,” said Dinesh Kumar Khara, a managing director at State Bank of India who has overseen about 10 mergers. “Banks also want to expand their liabilities and NBFCs can help with that,” he said in an interview.

Faced with high borrowing costs and a sustained shortage of liquidity in India’s money markets, shadow banks are increasingly pitching bonds with high coupon rates to the public, who may not be aware of the risks they’re taking on, Bloomberg News reported. Still roiling from the shock of defaults at Infrastructure Leasing & Financial Services Ltd., non-bank financing companies are exploring this relatively expensive funding channel.

In a first, the Department of Telecommunications (DoT) has constituted an ‘Insolvency Issues Committee’ to examine how it can protect its interest in cases where telecom operators are undergoing insolvency proceedings, BusinessLine reported. The moves comes as two operators – Aircel and Reliance Communications (RCom) – are undergoing bankruptcy proceedings. As per rules under the Insolvency and Bankruptcy Code (IBC) rules, DoT is an operational creditor when telecom companies initiate Corporate Insolvency Resolution Process (CIRP).