Liquidating SAA would leave most creditors with nothing: business rescue practitioners

SAA’s joint Business Rescue Practitioners (BRPs), Mr. Les Matuson and Mr. Siviwe Dongwana have argued strongly for the airline’s operations to be restructured rather than liquidating the business altogether.

The reason, they said, is that should SAA be liquidated, the airline’s creditors would probably get nothing, as the airline has limited assets to actually sell.

“The joint BRPs are of the belief that the Business Rescue Process will achieve a better outcome for all stakeholders than an immediate liquidation,” they said.

PwC who has been mandated by the BRPs to prepare a short term cash flow forecast, performed an initial high level calculation, which showed why liquidation would be a bad outcome for creditors.

“SAA leases most of the aircraft and, accordingly, in a liquidation, there will be limited assets which can be realised for distribution to creditors.

“The preliminary view is that after the allocation of the Distributable Proceeds to preferent creditors (comprising post commencement financiers, preferent claims of employees, post commencement unpaid lease payments) no funds will be available for distribution to concurrent creditors.

“The contingent and damages claims will crystallise on a liquidation which will increase the quantum of the concurrent claims which reinforces the preliminary view that the estimated dividend for concurrent creditors is zero cents in the rand.

The joint BRPs said that based on the availability of further Post-Commencement Funding – which National Treasury has undertaken to provide – and the ongoing support from all the stakeholders, including Government, Employees, Trade Unions and Trade Suppliers, they are of the opinion that that there is a reasonable prospect of a successful Business Rescue notwithstanding the inevitable risks and challenges.

It’s going to take time

In terms of section 150(5) of the Companies Act 71 of 2008, the business rescue plan should be published by the company within 25 days after the date that the BRPs were appointed – this would set a deadline of 13 January for SAA.

However, due to the complexity of SAA’s issues and the assessment needed on various scenarios, the BRPs have asked for an extension to 28 February 2020.

“The extent of stakeholder engagement and complexity of the business has meant that we have requested and been granted an extension for publishing the Business Rescue Plan. We thank creditors for their support and their agreed extension for the Plan. We intend to get the plan published by no later than the end of February 2020, if not before. We will communicate in this regard,” Matuson said.

Since the appointment of the BRPs on 5 December 2019, the team has met with numerous stakeholders, including the Department of Public Enterprise, National Treasury, Union representatives, International Air Transport Association and other trade partners, lenders, etc.

As requested by the lenders, Alvarez and Marsal LLP have been mandated to provide an objective, impartial insight into the operations of SAA. On 18 December 2019, Mr. Siviwe Dongwana was appointed as joint BRP.


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Liquidating SAA would leave most creditors with nothing: business rescue practitioners