SA Express provisionally liquidated

State-owned regional airline SA Express has been placed in provisional liquidation after its business rescue practitioners filed an urgent court application, a reliable source confirmed to Fin24 on Tuesday.

This comes after practitioners lodged the application in the Pretoria High Court on March 25.

In March SA Express, like other airlines had to suspend operations due to travel bans imposed for the national lockdown in SA. The BRPs have not been able to pay salaries for SA Express staff in March or April. Formal applications have been launched with the UIF for consideration of Covid-19 relief aid in this regard.

Gideon Slabbert, managing director and business rescue practitioner at Turnaround Rescue Solutions, explains that provisional liquidation means the affected parties have an opportunity to contest the court order.

The court can appoint a provisional liquidator to preserve the assets of a company until it hears the winding up application and decides whether or not to appoint a liquidator.

If the order remains uncontested, a final liquidation order will be passed and the Master of the High Court will appoint a liquidator to wind-up the company.

"Winding up the company entails closing the business, selling all assets and collecting all outstanding debt so that the proceeds can be paid out to the affected parties in order of preference according to the Insolvency Act," says Slabbert.

SA Express was placed under business rescue last month due to financial pressures that resulted from years of mismanagement and state capture, the department said. The application to place it into business rescue was brought by ZieglerSA, a service provider to the airline.

The practitioners claim the government deliberately withheld financial support to the tune of R350 million from the Department of Public Enterprises.The DPE, on the other hand, felt the plan proposed by the BRPs did not meet certain basic requirements and did not set out a credible business case to allow the necessary funding to be unlocked so that a long-term rescue plan could be developed.

At the time of the application for liquidation, the DPE had indicated that it would determine its course of action after studying the liquidation application. The department said it had to follow rigorous legal public finance procedures.

The state has provided more than R1.2 billion in urgent financial support to SAX for the 2019/20 financial year, including R300 million released last October.

Before SA Express was placed under business rescue, government mandated the board and management to investigate and terminate a number of irregular contracts as a way to save money and root out corruption, according to the department.

In the view of the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) employees are now made to suffer  as a result of the mismanagement of the airline.

An SA Express employee who spoke to Fin24 on condition of anonymity, claims that nothing has been officially communicated to the employees.

"Everything we know we've heard through social media and the press. No first hand information or communication from any of the authorities," said the employee.

The DPE responded later on Tuesday that government is reviewing its options in all airline assets and will inform the public of further developments in due course.


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