Unions representing workers at Mango have lodged a business rescue application (Photo by Gallo Images/Die Burger/Jaco Marais).
- A creditor of Mango airlines has withdrawn a liquidation application, in order to allow a business rescue process to play out.
- A judge, by next Wednesday, is set to rule on whether the business rescue process of Mango or that of its trade unions will be taken forward.
- Mango does not want joint-business rescue practitioners to be appointed, as this could obstruct the process, says its legal counsel.
One of low-cost airline Mango’s creditors has withdrawn a liquidation application as it waits for the outcome of a possible business rescue process – which a court must still rule on.
The matter, which was meant to be heard on Tuesday, was postponed to allow the lessor – who filed the liquidation application in April this year – to take time to consider its position.
Mango and its labour unions both agree that the airline needs to enter into business rescue.
Mango filed for business rescue with the Companies and Intellectual Property Commission (CIPC) on 28 July, 2021. But the CIPC rejected the filing because it took place months after the initial resolution was taken by Mango to opt for business rescue in April.
Mango now wants the court to rule that the CIPC wrongfully dismissed its notice.
The trade unions – the Mango Pilots’ Association (MPA), the South African Cabin Crew Association (SACCA), and the National Union of Metalworkers of SA (Numsa) – meanwhile lodged their own business rescue application with the courts.
They are challenging Mango’s claim that it adopted and filed its resolution to go into business rescue in time.
Judge Michael Antonie, who heard arguments virtually from both sides on Friday, under the South Gauteng High Court, reserved judgment and is set to hand down a ruling by Wednesday.
Numsa spokesperson Phakamile Hlubi Majola said the union wants the court to allow their preferred practitioner, Ralph Lutchman, to be involved in the business rescue process.
However, Mango’s legal counsel, Advocate Arnold Subel SC, said that the company had given “long and serious” consideration to a “bridging position” where joint business practitioners could be appointed. But he said that this was not favoured because there have been past examples of where joint practitioners have “retarded or obstructed” the business rescue process.
Mango wants Sipho Sono to be appointed business rescue practitioner.
The unions’ legal counsel, Advocate Michael Hellens SC, said that by virtue of failing to file for business rescue, within five days of the Mango board taking a resolution, then it essentially had no “force or effect”.
The CIPC was thus “indubitably” correct to reject Mango’s notice.
But Subel put forward that any delays in their business rescue process are due to the unions’ application – which had to be heard in court.
“Had we not been spending time on this application, and money unfortunately, the company would happily be in business rescue already and people would have been able to get on with it.”
Hellens also put forward that SAA, which recently completed its business rescue process, would now be competing with Mango. “That is the commercial reality out there. One wonders if SAA has the interest of Mango at heart,” he added.
Subel, however, argued that the delay was not sinister. As a public entity, Mango would require approval from the shareholder – which is government – to go ahead with the business rescue process. Government, as the shareholder had to consider the feasibility and viability of the decision – and if the airline could emerge solvent or yield better returns.
Subel said that Public Enterprises Minister Pravin Gordhan could not make decision about this “on the fly”, and it would take time. “A number of stakeholder and interested parties – SAA, the minister and Treasury need to consider the matter,” Subel said. He said there was nothing to suggest stakeholders were “dragging their heels” or putting the resolution in the “back pocket”.
Certain criteria must have been met for a company to enter business rescue and government could not simply “rubber stamp” it.
“If anything, the government, Treasury and the minister, we submit, were acting responsibly as they were expected to do in taking a proper view, and a considered view as to whether or not business rescue was the appropriate course,” said Subel. “[There was] nothing sinister, nothing untoward and there was no contrivances,” he added.
Hellens also questioned the lessor’s sudden withdrawal signalled that something was “rotten in Denmark”, implying that the lessor had struck a deal with SAA to withdraw the liquidation application.
Judge Antonie called out Hellens for speculation.
Similarly Subel said that Hellens’ comments were “wholly inappropriate”. Subel said that the lessor on Tuesday had not taken a position to support either of the parties, but rather asked for a postponement on the matter to consider the position.
“All one can infer is they had considered the position and that is what has motivated the election to withdraw the application for liquidation. There is nothing sinister and nothing ‘not well in the state of Denmark’,” he said.
Mango, which employs more than 700 people, still has not received R819 million from a R2.7 billion special allocation for SAA’s subsidiaries. The funding for Mango has been approved by Parliament and the Act relating to it came into effect some weeks ago.
On average, Mango employees who have continued working are owed about six months’ worth of salaries. Mango employees’ salaries for June are still outstanding, and the preceding months saw them receiving partial salary payments.
With the exception of September and December last year and February to May this year, when they got full salary payments, Mango employees have been receiving partial salary payments since April 2020.