Home News SA Express liquidation: Final decision to be made in June

SA Express liquidation: Final decision to be made in June

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Should the liquidation be made final, hundreds of jobs will be on the line as the regional airline had a total of 813 employees at the end of July 2019.

Johannesburg – THE final decision on the future of the troubled state-owned airline SA Express is to be made in June, following its provisional liquidation on Tuesday.

Should the liquidation be made final, hundreds of jobs will be on the line as the regional airline had a total of 813 employees at the end of July 2019.

South Gauteng High Court Judge Mpostoli Twala placed the airline under provisional liquidation following an urgent application by its business rescue practitioners, Phahlani Mkhombo and Daniel Terblanche, after failing to secure more than R690million from the government.

In placing the airline under provisional liquidation, Judge Twala said other parties in the matter were not given an opportunity to respond by notifying them on the steps taken by Mkhombo and Terblanche.

He added that the business rescue practitioners also needed to observe the legal principle of audi alteram partem (listening to the other side).

The regional airline was placed under business rescue in February by South Gauteng High Court Judge Fiona Dippenaar, after it had failed to pay one of its creditors, Ziegler SA, almost R11.3million.

Judge Dippenaar appointed Mkhombo and Terblanche as business rescue practitioners in terms of the Companies Act of 2008.

A provisional liquidator will now be appointed to manage the financially distressed airline until the matter is back in the high court on June 9.

The provisional liquidator might recommend that Judge Twala’s order be lifted or be made final, but it is highly unlikely that the airline will survive as Mkhombo and Terblanche have told the high court that it cannot be saved.

Mkhombo and Terblanche’s attempts to secure funding from the government were unsuccessful, with the Department of Public Enterprises stating that their plan to save SA Express did not meet the basic requirements, and that it lacked a credible business case that could enable the government to unlock the required post-commencement finance.

According to the department, the government provided more than R1.2billion in urgent financial support to the airline during the 2019/20 financial year which ended last month, including R300m in October.

The department said this was an attempt to restore the damage done to the airline by corruption and mismanagement perpetrated by its former bosses.

It added that the government was not in a position to give further fiscal comfort, especially in the difficult economic times and when considering competing priorities.

SA Express staff have not been paid their March and April salaries, and the government has approached the Unemployment Insurance Fund (UIF) to ensure they receive support, asking that it be expedited.

Last month, SA Express lost its Supreme Court of Appeal bid to overturn another South Gauteng High Court ruling ordering it to pay more than R4.7m plus legal costs and interest to Bagport, a company that provided a baggage-wrapping service to the airline.

Political Bureau