MPs lash SA Express liquidators

SA Expresses liquidators will be subpoenaed to appear before the Standing Committee of Public Accounts (Scopa), after the team failed to attend the scheduled briefing with members of Parliament (MPs) on Tuesday. 

The meeting that was specifically scheduled for the liquidators who were not present at the May 15 briefing, where the Department of Public Enterprises (DPE) and South African Airway’s (SAA’s) business rescue practitioners were briefing MPs about developments at the two state-owned entities, which are under administration. 

The Scopa meeting coincided within an earlier ruling by the High Court in Johannesburg to extend SA Express’s provisional liquidation by three months to September 9. 

SA Express was placed under provisional liquidation on April 29. This would have been turned into a final liquidation order on June 9, however the liquidation team led by Aviwe Ndyamara requested an extension, stating that the team needed time to familiarise itself with the business, its assets and the claims against it. 

Not ideal 

Ndyamara further argued that an extension would allow a window of opportunity for interested parties in the market to buy the airline, or possibly for the DPE to  “propose a restart” of its operations. 

The airline’s business rescue practitioners, as well as unions, supported the liquidator’s request to extend the provisional liquidation, on the basis that there could possibly be a better outcome for the airline which would be jeopardised by a final liquidation. 

Final liquidation would mean that the airline would lose its aviation licence.

This would “ water down prospects of creating value for creditors, as the assets of SA Express may have to be sold haphazardly, which will not create sufficient value for creditors,” said rescue practitioner Daniel Terblanche in court papers

Unacceptable

Deputy Minister Phumulo Masualle conveyed the liquidators’ apologies to the MPs, in which they admitted to not being prepared to present an update on the airline and requested that they return on July 15. 

Scopa chairperson Mkhuleko Hlengwa of the Inkatha Freedom Party, said the liquidators did not have the “basic courtesy” to communicate their case with MPs in the virtual meeting. 

“Their action in my view undermines Parliament, undermines the workers of SA Express and undermines the South African public.

“These delays, postponements and extensions are designed to milk taxpayers. It’s totally unacceptable,” added Hlengwa. 

He explained that the BRPs and liquidators who assume the obligations of accounting officers of state-owned entities, are expected to account to Parliament as and when they are required to do so. He said the failure is a dereliction of duty, describing it as “reckless and irresponsible”. 

The committee voted in favour of issuing the liquidators to appear before it, with Hlengwa stating that the meeting would take place next week and possibly even after-hours should a time slot not be found on the parliamentary schedule. 

Payments 

Alf Lees of the Democratic Alliance said the liquidators would have to explain to Parliament the basis on which they are applying for an extension, given that the DPE has in the past not shown a willingness to extend post commencement funding for the rescue of the airline – which implies there’s no further funding for liquidation. 

This lack of funding is what forced the rescue practitioners to make an application to liquidate the airline; the government did not oppose the application and what would have been the final liquidation hearing on Tuesday was also unopposed. “They are driving this company even further down the drain. It’s completely unacceptable chairman, and cannot happen this way,” said Lees in the briefing.

Defence?

In the court documents, Terblanche made reference to a letter sent by the DPE, outlining that R164 million had been allocated to SA Express over the medium term to pay off government-guaranteed loans.

“From the above, there is an indication that government is contemplating a form of a ‘restart’ for the operations of the airline,” said Terblanche. “A final liquidation would terminate prospects for these kinds of considerations for the airline’s shareholder”.