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South African Airways (SAA) commercial rescue practitioners (BRP), Les Matuson and Siviwe Dongwana sent a letter warning all affected parties that the airline could face a downsizing or total liquidation.
This comes after the Public Business Department refused to bail out the airline with another R10 billion earlier this month.
BRP: reduction or liquidation due to lack of funds
The BRPs reported in their letter on Thursday, April 23, that if the reduction process could not go ahead, the airline would most likely be wound up and the commercial rescue process would have to be discontinued.
“Since the professionals do not have more funds, the professionals have considered whether they can develop a commercial rescue plan that ensures a better return for SAA creditors than that which would result from its immediate liquidation,” he said.
“This involves a liquidation process that provides for the termination of employment of employees by agreement (with agreed severance packages), a sales process is carried out that will ultimately result in a distribution of such income to affected parties who have right to do so in terms of the corporate bailout waterfall, “he added.
If an agreement can be reached with employees, a business rescue plan can be developed and published.
Otherwise, professionals will not be able to continue with the commercial rescue process and the SAA will most likely be liquidated.
“Professionals do not have sufficient funds available to continue meeting SAA’s obligations to their employees beyond April 30, 2020 and bear the costs of the liquidation process. Consequently, the liquidation process depends on employees accepting the termination of their employment in a timely manner by mutual consent, ”the statement said.
The BRPs have presented a collective agreement to all SAA unions and non-union employee representatives on April 17 for their consideration and negotiation, and have reported that the agreement must be reached before April 24.
SAA in commercial bailout for almost five months
The BRPs, in their letter, reminded affected parties that SAA has been in commercial rescue for almost five months.
“The post-start financing received of R5.5 billion was fully utilized and utilized in March,” he said.
“It is the opinion of professionals that the proposed actions described above provide the most responsible way for a managed cessation of airline operations and risk management for all affected parties,” said BRPs.
Professionals believe that it is appropriate to consult with employees and creditors through the employee and creditor committees.
Employees and creditors are invited to provide questions they may have for professionals to the respective committee chairs by Friday, April 24, and appropriate steps will be taken to consult with the committees on Tuesday, April 28. A response will be provided to all affected individuals thereafter.
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