Three B777-300ERs belonging to Jet Airways (Mumbai International) will be sold to special purpose vehicles (SPVs) controlled by the Challenge Group after a failed appeal to the National Company Law Appellate Tribunal (NCLAT) by the consortium attempting to acquire the airline.

The bankruptcy appeals court handed down its decision in the matter of The Consortium of Murari Lal Jalan & Florian Fritsch vs. Ace Aviation VII Ltd. & Ors on December 22, 2023, after the consortium (JKC) appealed an October order by the National Company Law Tribunal (NCLT) for Jet Airways' monitoring committee to honour a 2022 agreement for Ace Aviation to buy the three aircraft.

Last week, the NCLAT also dismissed a bid by the All India Jet Airways Officers and Staff Association to thwart the sale, saying it would not be in the interests of Jet Airways to keep holding onto the grounded aircraft - VT-JEV (msn 35158), VT-JES (msn 35159), and VT-JEM (msn 35162) - all three of which are stored at Mumbai International.

"We're pleased with the NCLAT's decision to allow the sale of Jet Airways aircraft to Ace Aviation," said Challenge Group CEO Eshel Heffetz after last week's ruling. "Our confidence in the court process remains steadfast, and we believe that it will facilitate the completion of the sale."

"We are studying the judgement and after studying the detailed judgment we will decide on our options accordingly," a Jet Airways spokesperson told ch-aviation.

The NCLT awarded JKC the right to acquire Jet Airways after it collapsed in April 2019. Initially, the consortium said they had no interest in retaining the B777-300ERs, preferring to secure new aircraft when they relaunch. However, relaunch plans have not gone smoothly, and JKC has changed tact, arguing in favour of retaining the aircraft. The employees' union said that the aircraft should not be sold until their owed dues, such as gratuity and provident funds, were paid. However, the NCLAT said the sale proceeds would go into an escrow account for distribution per the agreed NLCT-approved resolution plan.

Ace Aviation VII Ltd, Ace Aviation IX Ltd, Ace Aviation X Ltd, the State Bank of India, JC Flower Asset Reconstruction Pvt Ltd, Punjab National Bank, and Ashish Chhawchharia were all named as respondents in JKC's appeal. The three Ace SPVs are controlled by Challenge Airlines MT (X6, Malta International), a subsidiary of Challenge Group. Heffetz said he hopes to finalise the acquisition as soon as possible "to prevent any loss in asset value as the longer sale process would deteriorate the aircraft's condition further and impact the commercial viability of the deal." His Ace SPVs paid a USD4.6 million deposit on the aircraft in 2022.