SAA business rescue practitioners: Retrenchment or liquidation
SAA business rescue practitioners (BRPs) say they do not have enough funds to continue with their obligations beyond 30 April.
South African Airways (SAA) business rescue practitioners (BRPs), Les Matuson and Siviwe Dongwana sent out a letter warning all affected parties that the airline could either face retrenchment or total liquidation.
This comes after the Department of Public Enterprises refused to bail out the airline with a further R10 billion earlier this month.
BRPs: Retrenchment or liquidation due to lack of funding
The BRPs advised in their letter on Thursday 23 April, that if the retrenchment process could not go ahead, then the airline would most likely be liquidated and the business rescue process would have to be discontinued.
“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,” it said.
“This entails a wind-down process which would envisage the termination of the employment of employees by agreement (with severance packages being agreed), a sales process being undertaken which will ultimately result in a distribution of such proceeds to affected parties who are entitled thereto in terms of the business rescue waterfall,” it added.
If an agreement can be reached with the employees, a business rescue plan can be developed and published.
If not, the practitioners are unable to continue with the business rescue process and SAA will most likely be liquidated.
“The practitioners do not have sufficient funds available to continue honouring the obligations of SAA to its employees beyond 30 April 2020 and to bear the costs of the wind-down process. Accordingly, the wind-down process is dependent upon employees accepting the termination of their employment timeously by mutual consent,” the statement read.
The BRPs have presented a collective agreement to all unions and representatives of non- unionised employees of SAA on 17 April, for consideration and negotiation and have advised that agreement must be reached by 24 April.
SAA in business rescue for nearly five months
The BRPs, in their letter, reminded affected parties that SAA has been in business rescue for almost five months.
“Post commencement funding received of R5.5 billion was fully drawn and utilised in March,” it said.
“It is the practitioners’ view that the proposed actions outlined above provide the most responsible way for a managed cessation of the operations of the airline and managing the risks of all affected parties,” said the BRPs.
The practitioners believe it is appropriate to consult with employees and creditors through employees’ and creditors’ committees.
Employees and creditors are invited to provide questions which they may have for the practitioners to the chairpersons of the respective committees by Friday 24 April and suitable arrangements will be made to consult with the committees on Tuesday 28 April. A response will be provided to all affected persons thereafter.