SAA will not survive past month-end. The airline now has two choices – go into immediate liquidation or let the business rescue practitioners (BRPs) develop a winding down business rescue plan, which could be better for the airline’s creditors and even for employees.
This is according to a letter (in which Tourism Update was copied) sent to “affected parties” – which include creditors, employees and trade unions – by the joint BRPs, Les Matuson and Siviwe Dongwana at 17h51 today (April 23).
The BRPs highlighted in the letter that this was as a result of the April 20 notice from government that there would be no further funding for SAA
Spokesperson for the BRPs, Louise Brugman, said the first option – the Section 189 winding down process – would see employees being terminated upon mutual agreement (and a severance package agreed on) and a sales process undertaken of properties, such as the cargo offices and Airways Park, and parts (such as engines), as well as a process of collecting outstanding trade debt.
“The revenue collected through this process will then be distributed to affected parties in terms of the business rescue waterfall,” explained Brugman, pointing out that the employees would be “higher up” on the priority list according to the waterfall distribution scheme, and the airline could potentially offer its creditors better packages.
“Winding down means more time and therefore better prices for the respective sales can be negotiated,” she added, noting that if an agreement for this option could be reached with the employees, the BRPs would develop a business rescue plan to that effect.
Should employees not agree to this option, the only other option is for the BRPs to request an urgent application to discontinue the business rescue plan and put SAA into liquidation. “That basically means a fire sale and SAA has to take what it can get in a sale,” explained Brugman.
She said the affected parties had until COB tomorrow to respond. “On Tuesday, April 28, we will have consultations and a decision will need to be reached before April 30,” said Brugman.
