The process of reviving state-owned low-cost airline Mango appears to have been stopped after the Gauteng High Court, Johannesburg declared that its business rescue plan cannot be implemented.

Aviation Co-ordination Services (ACS) hauled Mango and its business rescue practitioner Sipho Sono to court over the plan to save the subsidiary of South African Airways (SAA).

ACS, which provided security-related services such as baggage and cargo screening services, baggage reconciliation and check-in services, is among dozens of creditors owed about R2.91 billion by Mango before it was placed under business rescue in July 2021.

At the time it was placed under business rescue, Mango did not own any material assets as its most significant assets were leased.

In September 2021, a couple of months after being placed under business rescue the only asset on Mango’s balance sheet was a spare engine bought by SAA for US$9.6m with the lowest indicative offer received in the last 12 months being around US$2m (R30m then).

Mango also had an un-flown ticket liability of about R183m at the start of the business rescue through its full value voucher system.

ACS is owed over R23.3 million by the SAA subsidiary and was among the creditors who voted against Sono’s business rescue plan, which was approved by 98% of the voting creditors.

The company objected to a payment to the creditors (clause 6.2.6) in the plan stating that all of the remaining balance of the claims of the remaining concurrent creditors will be ceded to the investor at face value thereof but for nominal consideration.

It also indicated that the concurrent creditors, except the SA Revenue Service and the creditors in respect of the un-flown ticket liability, will be paid a “top up” settlement payment for their claims.

This meant that the majority of the creditors would be paid 4.43 cents to every rand. ACS complained that the estimated settlement would translate roughly to R44,300 per R1m, a return which is negligible, if not nominal.

In addition to the debt acquired by the investor through the cession of the claims of concurrent creditors may be converted to equity (or quasi equity instrument), subordinated or otherwise be dealt with in such manner that Mango will be restored to solvency.

On Tuesday, Judge Denise Fisher found that “the plan, shorn of its complexity, amounts to nothing more than the confiscation of the creditors’ claims in order that they be transferred by Sono to an investor who pays no value for them or the shares”.

“The compulsory cession contained in clause 6.2.6 of the business rescue plan is declared to be invalid and of no force and effect. It is declared that the business rescue plan cannot be implemented,” the judge ordered.

Judge Fisher said Sono’s opposition of ACS’s application was unmeritorious.

Earlier this month, Sono announced Mango’s plans to resume operations and requested passengers with un-flown tickets to register on its website, promising full value refunds once it takes to the skies again after four years.

Sono did not respond to requests for comment on Thursday.

loyiso.sidimba@inl.co.za

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