SA Express says it will appeal a judgment by the High Court in Johannesburg – placing the company under business rescue. This after logistics firm, Ziegler, took SA Express to court over its failure to pay R11 million in debt and requested that the court place it under business rescue.
It is the first time that a court order of this nature has been made against a state-owned firm, which could have far-reaching implications for other cash strapped SOEs.
Solidarity’s Connie Mulder says the judgment sets a precedent for other SOEs.
“This judgment has a massive precedent being set. We have now seen with the Companies Act that theoretically SOEs can be placed under business rescue. It says every SOE in SA is under the jurisdiction of the courts and the Companies Act and should be able to be placed under business rescue – if they do become financially distressed and is technically insolvent.”
“Business rescue is the working room, the emergency room, just before liquidation – in SA Express’ case, that is true. If you think SAA was in bad shape, SA Express was in much worse shape. It’s a situation where you are looking at some form of labour restructuring, hopefully, they can try and avoid it, but it is better than liquidation where everyone loses their jobs,” says Mulder.
After a long delay, SA Airlink tabled its financial statements in Parliament in November 2019.
The airline recorded losses to the tune of R590 million for the financial year that ended on the 31st of March 2019.
The airline had also received a disclaimer audit opinion from the Auditor General. The books then showed the company was really struggling.
The airline also disclosed fruitless and wasteful expenditure worth over R50 million, while irregular expenditure stood at R834 million.
Meanwhile, SAA Business Rescue Practitioners are due to hold talks with trade unions this afternoon to discuss further their restructuring plans for the cash strapped national airline.
It’s the second such meeting in as many days as they race against time to finalise their work and submit a report to the government and creditors of the troubled national airline.
Towards the end of January 2020, the Development Bank of South Africa (DBSA) bailed out SAA with an amount of R3.5 billion.
Some analysts were concerned that taxpayers’ money that could have been utilised for valuable projects is now going to bail SAA once again.
They were nonetheless chuffed that the money will be going into the hands of Business Rescue Practitioners instead of executives.
The financial boost has put an end to a month-long search for funding by the government.
Analysts were optimistic that this will help facilitate the business rescue process and avert liquidation, which could have cost taxpayers R40 billion.
The business rescue process began in December 2019 with the local commercial banks providing the initial post commencement funding of R2 billion.
SAA has not made a profit since 2011 and has been relying on government bailouts to remain solvent.