InvestorQ : What is the purpose of the Jet resolution if banks are only going to get just 5% of loans?
shrinidhi Rajan made post

What is the purpose of the Jet resolution if banks are only going to get just 5% of loans?

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2 weeks ago
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That is a good question and actually paying 5% is a mockery of a debt resolution. Ironically, banks knew that when push comes to shove, international lessors get precedence over Indian secured creditors as per global contract structures in global jurisdictions. Things would have been different if Jet was allowed to function. For an industry like aviation, cessation of operations is like wining up and is the end of the road. That is what explains this paltry 5% pay-out to creditors, since that is the value left in the company anyways.

There are some lessons to learn from the Jet saga. Banks will write off a fortune in Jet Airways. A rescue package would have avoided that. This has actually happened all over the world. More importantly, there are big question of NCLT applied to non-manufacturing companies with no worthwhile physical assets. Essar Steel and Bhushan were low hanging fruits for NCLT. The challenge will be handling the likes of Jet Airways, DHFL and IL&FS.

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