Financial Mail and Business Day

Mango objects to regulator’s rejection

Thando Maeko Political Writer maekot@businesslive.co.za

Mango Airline’s last-ditch attempt to be voluntarily placed in business rescue has been rejected by the companies regulator on the grounds that the carrier filed its application late. In court papers, Mango CEO William Ndlovu accuses the Companies and Intellectual Property Commission of going beyond its legal authority.

Mango Airline’s last-ditch attempt to be voluntarily placed in business rescue has been rejected by the companies regulator on the grounds that the carrier filed its application three months too late.

The Companies and Intellectual Property Commission requires companies to file an application to be placed in business rescue five days after a board resolution to do so.

Mango filed its application to Companies and Intellectual Property Commission commissioner Rory Voller on July 28 after Mango’s board resolved to have the airline placed in business rescue on April 16, court documents show.

In business rescue, Mango’s operations would be handed over to a rescue practitioner who would be 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.

The state-owned low-cost airline filed its business rescue application to Voller after the agency’s e-portal rejected its application on the basis that the application had been filed too late, that there are pending liquidation proceedings against it, and that Mango did not have a properly constituted board at the time of the board resolution.

The rush to place the airline in business rescue follows the grounding of Mango’s aircraft in July after it failed to make outstanding payments to Air Traffic & Navigation Services (ATNS).

Mango is crippled by a R2.8bn debt burden after being battered by Covid-19 travel restrictions and the lack of support from SAA, which was placed in business rescue for 16 months in December 2019.

Before the abrupt grounding of its fleet, Mango only had two operational aircraft and was unable to pay its creditors and employees.

In court papers, Mango CEO William Ndlovu accuses the Companies and Intellectual Property Commission (CPIC) of going beyond its legal authority when it rejected the airline’s business rescue application in July, arguing that it does not have the authority to determine the validity of the airline’s board resolution. “The CIPC is simply not empowered, on any interpretation of section 129 of the [Companies] Act or otherwise, to decide unilaterally that it can (i) refuse to process the BR [business rescue] resolution on the basis that it was adopted more than five days prior to the filing, and (ii) refuse to make a change to the company’s enterprise status to ‘in business rescue’ once the BR resolution had been filed with the CIPC,” Ndlovu says.

Ndlovu is further seeking an application by unions to force the airline to be placed in business rescue to be dismissed by the courts because the airline has already started business rescue proceedings as per its April board resolution.

Mango’s application to the CIPC was only filed after the unions at the airline approached the high court in Johannesburg to force the company to be placed in business rescue in line with the board resolution and the approval from parent company, SAA, and the government.

As a state-owned entity, Mango is bound by the Public Finance Management Act and could therefore not proceed with the business rescue application to the CIPC in April without the approval of SAA and the government, Ndlovu says. Approval from the government was communicated to Mango’s board on July 22, according to Ndlovu.

The National Union of Metalworkers of SA (Numsa), the SA Cabin Crew Association (Sacca) and the Mango Pilots Association want the case to be heard on an urgent basis on August 3 to prevent the airline from being liquidated and its assets sold to pay creditors.

Should the ailing SAA subsidiary undergo business rescue as well as receive the R819m due to it from the government, it could return to profitability by 2024, according to a Mango financial sustainability report.

MANGO IS CRIPPLED BY A R2.8BN DEBT BURDEN AFTER BEING BATTERED BY COVID-19 TRAVEL RESTRICTIONS

BEFORE ITS ABRUPT GROUNDING, MANGO ONLY HAD TWO OPERATIONAL AIRCRAFT AND WAS UNABLE TO PAY ITS CREDITORS

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2021-08-02T07:00:00.0000000Z

2021-08-02T07:00:00.0000000Z

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