SAA left with choice between wind-down or liquidation, say business rescue practitioners

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PORT ELIZABETH, April 23 – The business rescue practitioners (BRPs) appointed to implement a rescue plan for national carrier South African Airways (SAA) have announced on Thursday that without further government funding they will not be able to comply with their mandate and that their only options would be to either wind down the airline’s operations or liquidate it.

The BRPs said that after the government notified them on April 10 that it would not provide them with any further funding, it is their view that the proposed actions provide “the most responsible way for a managed cessation of the operations of the airline and managing the risks of all affected parties”.

Due to the lack of funding, they would not be able to pay the airline’s employees beyond April 30, they added.

“Given the fact that the practitioners have no further funding, the practitioners have considered whether they can develop a business rescue plan which secures a better return for SAA’s creditors than would result from its immediate liquidation.”

The wind-down process it proposed would provide severance packages for employees, undertake the sale of certain assets and the distribution of the proceeds of such sales to the parties involved.

“If an agreement can be reached with the employees, a business rescue plan can be developed and published,” the statement said.

Failure to reach an agreement with employees and their unions would result in the immediate need for liquidation, the BRPs said.

“If the practitioners cannot reach an agreement with employees, then the practitioners are unable to continue with the business rescue process and the practitioners will have to make an urgent application for an order discontinuing the business rescue proceedings and placing SAA into liquidation.”

The BRPs said that on April 17, they presented a collective agreement to all unions and non-unionised employee representatives. The employees had until Friday to agree.

“This agreement seeks to provide the employees with the opportunity of concluding a mutually agreed separation of employment,” the statement said.

The BRPs said in the statement that the airline had been in business rescue for almost five months and that the R5.5-billion funding received had been “fully drawn and utilised in March”.

They said that on March 9 they had issued a section 189 notice advising all unions and employees of the airline’s intention to start retrenchments.

“This notice was supplemented by a further notice on 19 March 2020 following the president’s address on 15 March 2020 and the implementation of a travel ban beginning on 18 March 2020.”

Since the start of the national coronavirus lockdown and travel ban, SAA has been unable to conduct its normal operations. The airline has only flown at the request of foreign governments who, through their embassies, have chartered flights to assist with the repatriation of their citizens.

The statement said that the charters would end in April. It further stated that SAA has no funds to continue trading and cannot pay “a significant salary bill” beyond April 2020.

“The practitioners believe it is appropriate to consult with employees and creditors through employees’ and creditors’ committees,” the BRPs said, inviting employees and creditors to submit questions by Friday.

They said “suitable arrangements will be made to consult with the committees on Tuesday… and a response will be provided to all such questions to all affected persons thereafter”.

– African News Agency (ANA)