- The provisional liquidators are allowed to sell and transfer property of the state-owned airline, the high court ruled.
- They may also attract new investment.
- The airline - which has "substantial assets", according to an affidavit - is in provisional liquidation after a failed business rescue attempt. It has not yet been placed in final liquidation.
- The provisional liquidators applied for an extension of their powers.
The provisional liquidators of SA Express are allowed to sell and transfer property of the state-owned airline, the North Gauteng High Court in Pretoria found on Monday.
They will also be allowed to try and attract new investment for the airline.
Fin24 reported last week that the National Union of Metalworkers of South Africa and the South African Cabin Crew Association claim to have an investor from the United Arab Emirates potentially interested in buying a stake in SA Express.
In terms of South African law foreign ownership in domestic airlines is limited to 25%.
The regional state-owned airline is currently in provisional liquidation after a business rescue attempt failed. The court date was set for 9 June for any party to come and show why the airline should not be placed in final liquidation.
However, due to the possibility of a potential investor, the matter has been postponed until 9 September.
SA express has not yet been placed in final liquidation and no meetings of creditors have been convened. It is not clear at this stage when the first meeting of creditors would be convened – but according to the court documents seen by Fini24, it is likely that a second meeting of creditors will only be able to take place in December 2020.
One of the key aspects the provisional liquidators want to avoid, is that the airline loses its operating licence. Should the business be placed in final liquidation, this valuable and essential asset – especially in case the airline ends up having to be sold – will be lost.
The provisional liquidators applied for an extension of their powers, including to be allowed to convene an inquiry in terms of the Companies Act.
The court has granted the provisional liquidators the right to appoint attorneys to supply legal advice and act on their behalf where necessary and to decide whether they want to abide by certain agreements concluded by the airline prior to liquidation.
The provisional liquidators are now authorised to do what is necessary to wind up the affairs of the airline.
"The provisional liquidators have a duty to investigate the financial position and affairs of SA Express," states the supporting affidavit by Aviwe Ndyamara of the Tshwane Trust Company.
The liquidators can also now investigate the debtors of SA Express, safeguard and preserve assets and avoid further liability.
As of March 2020 SA Express owed its creditors R741 895 597, while it is owed more than R115 683 607 by debtors. South African Airways, currently in business rescue, for example, owes SA Express more than R100 000 000.
"SA Express has substantial assets - the liquidators have received queries relating to the sale of assets belonging to the airline - the assets are situated all over the country and it would save enormous costs of removal and storage if it can be sold out of hand," Ndyamara states in his supporting affidavit.
In addition, these assets should be insured, something which the airline cannot afford.
"SA Express is unable to maintain its trading activities, has no funds to pay staff, maintenance of aircraft, insurance or funds to cover critical expenses. this position has not changed…Staff claims need to be met as matter of urgency," states the affidavit.
The contracts of SA Express employees have been suspended in terms of the Insolvency Act.
Last week Parliament's Standing Committee on Public Accounts said it is important for them to know what the road map is for SA Express, where the problems that lead to its provisional liquidation originated from, and what is causing the delay in paying employees their salaries. The committee also wants to know how much the former business rescue practitioners and the liquidator have been paid.
In March, SA Express, like other airlines, had to stop operations due to travel bans imposed for the national lockdown in SA.
It was placed in provisional liquidation on 29 April 2020 after its joint business rescue practitioners filed an urgent court application in this regard in the South Gauteng High Court.
This followed after a failed business rescue attempt, brought by a service provider in March. The state has provided more than R1.2 billion in urgent financial support to SA Express for the 2019/20 financial year, including R300 million released last October.
Before the airline 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.
The business rescue practitioners and the Department of Public Enterprises could, however, not agree on a business rescue plan and funding. The practitioners claimed government deliberately withheld financial support to the tune of R350 million. The DPE, on the other hand, felt the proposed business rescue plan did not set out a credible business case to allow further funding.
If SA Express goes into final liquidation, all its assets would have to be sold and outstanding debts collected so that affected parties can be paid in order of preference in terms of the act.