Mango was granted an extension to appoint a business rescue practitioner on Tuesday, pending the outcome of a court application by unions to place the embattled budget airline in business rescue.
Lucinda Steenkamp, the senior legal adviser for the Companies and Intellectual Property Commission (CIPC), told the Johannesburg High Court on Tuesday that ongoing litigation against the airline was grounds for an extension.
The CIPC requires the appointment a business rescue practitioner five days after the date of a board resolution to place a company in rescue and the filing of documents with the regulator. Mango couldn’t comply because management, unions and the CIPC disagree regarding the status of the airline’s business rescue.
Mango insists it voluntarily placed in business rescue on July 28 after it filed the required documentation to CIPC commissioner Rory Voller. The regulator, however, says the airline filed its documentation three months too late.
In addition, the National Union of Metalworkers of SA (Numsa), the SA Cabin Crew Association (Sacca) and the Mango Pilots Association want the high court to compel the airline to undergo business rescue in line with the April 16 board resolution and July 22 approval from the government.
“We want Mango in business rescue. They [Mango] want to undergo business rescue but they want ultimate control,” said Jordan Butler of Sacca.
Under business rescue procedures, Mango’s operations would be handed to a rescue practitioner tasked with placing the airline on a sound financial footing, ensuring that it remains a going concern and that its more than 700 employees keep their jobs.
Unions have accused management and shareholders of delaying the process and deepening Mango’s financial distress.
The unions' court application was postponed to Friday to allow Mango’s creditors, Aergen Aircraft Four and Aergen Aircraft Five, to file responding papers to the airline’s CEO William Ndlovu claims that the creditors applied for liquidation on April 28, 12 days after the board resolution to place Mango in business rescue.
Mango has debt of R2.5bn, which includes outstanding payments to fellow SAA subsidiary SAA Technical, Airports Company SA (Acsa) and Air Traffic Navigation Services (ATNS).
The liquidation application by Mango’s creditors, which was scheduled to be heard in June, was postponed to August after negotiations between the parties.
Mango flights have been grounded since the end of July. At the time of its grounding, it had only two operational aircraft.
Should Mango be liquidated it would cease all operations and its assets would be sold to pay creditors.
Apart from Mango failing to file the business rescue documentation timeously, the CIPC said it rejected Mango’s business rescue application because it did not have a properly constituted board at the time of the business rescue resolution and due to pending liquidation proceedings.
In court papers Mango CEO Ndlovu said the CIPC had exceeded its legal authority by rejected the airline’s business rescue application in July.
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