Challenge Group no longer wants ex-Jet Airways B777

Boeing 737-800 (Photo: Jet Airways).
Boeing 737-800 (Photo: Jet Airways).

Challenge Group no longer wants ex-Jet Airways B777

Boeing 737-800 (Photo: Jet Airways).
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A seemingly endless bureaucratic battle has been delaying Malta-based Challenge Group's takeover of three Boeing 777-300ERs for almost two years. This situation has now led to a clear warning from the company that it will exit the business if immediate progress is not made. The dispute highlights the difficulties international investors face in resolving insolvent companies in India.

The Challenge Group had successfully bid for three decommissioned aircraft from bankrupt Indian Jet Airways. Despite a clear decision by India's Supreme Court allowing the aircraft to be sold to Ace Aviation, a subsidiary of Challenge Group, ongoing bureaucratic and legal hurdles are hampering the final takeover.

History of delays

Jet Airways, once one of India's largest airlines, ceased operations and filed for bankruptcy in April 2019. The Jalan Kalrock Consortium (JKC) later acquired the rights to buy the insolvent airline. But JKC also faces challenges, especially when it comes to reaching an agreement with creditors.

Despite a clear verdict from the Supreme Court of India on March 7, 2024, upholding earlier decisions of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) and approving the sale to Ace Aviation, the deal remains stalled . Challenge Group Chief Investment Officer Michael Koish told CNBC TV his frustration with the lack of progress and dialogue from the oversight committee.

The Challenge Group's point of view

“We don’t understand what’s going on here. On the one hand, the Supreme Court made a very clear decision to continue the deal. On the other hand, no one really wants to do anything productive. We have already traveled to India three times since last year, including last week, to close this deal. However, the SC did not speak to us or meet with us, so we approached the NCLT on May 2,” Koish said.

The Challenge Group has made it clear that it is not prepared to accept the endless delays. If the supervisory committee does not make a positive decision on May 17th, the company will demand a refund of the deposit of USD 5,6 million plus interest and withdraw from the deal.

The delays reflect the complex legal and commercial challenges associated with insolvency administration in India. The Insolvency and Bankruptcy Code of India (IBC) was introduced in 2016 to expedite resolution of distressed companies and strengthen creditors' rights. However, practice shows that, particularly in the case of large and internationally significant insolvencies, lengthy legal and bureaucratic procedures often slow down business.

A decisive factor is the disputes with creditors. They have a strong interest in receiving the highest possible repayments, which often leads to conflicts with buyers who want a quick and smooth takeover.

The ongoing uncertainty surrounding the sale of the three B777-300ERs is also having an impact on the broader aviation industry. Airlines worldwide are looking for ways to expand and modernize their fleets to handle growing passenger and cargo traffic. Delays in aircraft acquisition can impact strategic plans and increase financial burdens.

The Jet Airways case highlights the challenges that international investors in India face when it comes to winding down insolvent companies. Despite a clear legal framework, bureaucratic hurdles and conflicts of interest can significantly delay the process. For the Challenge Group everything now depends on the decision of the monitoring committee on May 17th. If this decision leads to further delays, the deal risks ultimately collapsing, which could have far-reaching consequences for everyone involved.

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Editor of this article:

Amely Mizzi is Executive Assistant at Aviation Direct Malta in San Pawl il-Baħar. She previously worked in the Aircraft and Vessel Financing division at a banking group. She is considered a linguistic talent and speaks seven languages ​​fluently. She prefers to spend her free time in Austria on the ski slopes and in summer on Mediterranean beaches, practically on her doorstep in Gozo.
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About the editor

Amely Mizzi is Executive Assistant at Aviation Direct Malta in San Pawl il-Baħar. She previously worked in the Aircraft and Vessel Financing division at a banking group. She is considered a linguistic talent and speaks seven languages ​​fluently. She prefers to spend her free time in Austria on the ski slopes and in summer on Mediterranean beaches, practically on her doorstep in Gozo.
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Nobody likes paywalls
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If you enjoyed this article, you can check Aviation.Direct voluntary for a cup of coffee Coffee trail (for them it's free to use).

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