Comair customers could wait years for refunds – and might not get anything back: legal expert

Customers who purchased tickets for either Kulula or British Airways flights could wait three years to get their money back, and it might not be all of it, says Vincent Manko, director of business rescue at legal firm Cliffe Dekker Hofmeyr.

The and domestic British Airways operator was placed into provisional liquidation earlier this month and this has led to a hierarchy of creditors which need to be paid, said Manko.

Speaking to SAfm, he cautioned that despite some banks refunding customers, those who do not have access to these services would be paid last. Ticket holders in the context of the Comair liquidation process are concurrent creditors.

He added that the liquidation process of Comair could take up to two to three years at a minimum due to the company’s size. Customers will then have to wait roughly three to four years to get a refund, and there is no guarantee that it will be in full.

Manko said customers can approach the course for recourse if they feel they have been unfairly  ‘duped’ after Comair had a sale of tickets prior to grounding flights.

With regard to Comair’s agreement with British Airways, there will be an election among expert liquidators as to if they will terminate the agreement. Manko said the agreement with the parent company would likely end as Comair begins being wound up.

At the granting of the provisional order for liquidation, all agreements the Comair had engaged in, such as employment agreements, was terminated by operation of law. He added that there will likely be no negative impact on British Airways except for reputational damage.

Ranking of creditors

According to a report by legal firm Bowmans, there is a ranking of creditors in which they are paid in order from the most important to the least, namely:

  • Secured creditors: who hold security over their claims and are ranked and paid first from the proceeds of the sale of assets by the liquidating company.
  • Preferent creditors: creditors who do not hold specific security for their claims but rank above concurrent creditors.
  • Concurrent creditors: creditors who are paid last through the proceeds of unencumbered assets that remain after preferent creditors have been paid in full.

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Comair customers could wait years for refunds – and might not get anything back: legal expert