Founder: Turnaround Talk
In a few months time, the business rescue industry will eagerly await the release of the highly anticipated 2023 edition of the Deloitte Restructuring Survey. Talking to a few turnaround professionals who have already participated in the compilation of the survey, issues such as the success rate of business rescue, the number of suitably skilled turnaround professionals, and the length of time to implement a business rescue are all challenges that the industry needs to address. Public Enterprises Minister – Pravin Gordhan – should take notice.
Because turnaround professionals are tasked with getting a company out of financial distress, time will always be an issue when it comes to implementing a business rescue plan. Add to this the emotional toll that financial distress has on other stakeholders in the process, and you have a variety of vices calling for early implementation that has a favorable outcome.
Throw Government into the mix and the process really grinds to a halt. There is still a lot of unclarity about the future of Mango which was a casualty of the SAA business rescue. Two weeks ago it was reported that the airline is in trouble if a resolution is not reached.
Gordhan has had running battles with the airline in the past. Now, while he is dealing with more pressing issues (in the energy crisis), he could be taken to court to force the Mango sale.
Valid and complete application for the proposed sale
According to court documents, seen by News24, Mango intends to bring an application in the North Gauteng High Court in Pretoria later this month to declare that Mango and South African Airways (SAA) – Mango’s parent company – submitted a valid and complete application for a proposed sale of Mango to Gordhan in terms of the Public Finance Management Act (PFMA).
Mango needs Gordhan’s approval to implement the adopted business rescue plan, which contemplates SAA selling all its shares in Mango to an investor.
The article points out that, according to a previous business rescue report by Sono, an updated application for approval in terms of the PFMA had been submitted to Gordhan by SAA on 28 November 2022, addressing issues raised by SAA against the proposed sale of Mango.
Photo By: News24
Seeking answers
The article adds that Sono now wants the court to declare that Gordhan’s refusal to make a decision is unlawful and constitutionally invalid. Sono also wants the court to declare that Gordhan is not entitled to request Mango to furnish further information. The court will be requested to direct that Gordhan makes a decision regarding the PFMA application for the sale of Mango and communicate the outcome to Mango and SAA, including providing reasons for the lack of making a decision.
If Gordhan then fails to comply, Sono wants the court to rule that Mango and SAA may then assume that the PFMA application has been approved and go ahead with the proposed sale.
“Regrettably, Gordan and more recently SAA have sought to frustrate [the sale of Mango]. They have refused to regard the information I placed before Gordhan as constituting a valid application in terms of the PFMA,” Sono states in the court documents.
“Gordhan’s decision is vitally important for the implementation of the business rescue plan I have prepared and has been lawfully adopted by the affected persons, and particularly the creditors of Mango in terms of the Companies Act.”
‘Intolerable’
The News24 article points out that Sono claims that Gordhan has repeatedly requested additional information from SAA or of him as the rescue practitioner, “despite the fact that I have already furnished the relevant and necessary information to him to make a decision”.
Sono regards Gordhan’s repeated requests for further information as “unnecessary delays that constitute a manifest breach of the PFMA”.
Photo By: IOL
“The continued delays by Gordhan and SAA are intolerable. They are inconsistent with Gordhan’s constitutional and statutory duties which call for him to do his duties diligently and without delay. They now imperil Mango’s very survival and if not urgently corrected by this court, will result in no other alternative than Mango being wound down,” states Sono.
The article adds that the court documents indicate that Mango opposes the matter being referred to mediation. It states that “previous attempts to meaningfully engage with [Gordhan] has been unsuccessful and there is, accordingly, no prospect of a successful mediation”.
Mango was placed in voluntary business rescue in July 2021 and has not flown since. Sono wanted Mango to restart operations on 2 December 2021. However, the DPE made it clear this could only be done if an investor bought Mango. After a due diligence process, a consortium, whose identity has not yet been revealed, was selected by Sono as the preferred bidder to buy Mango.
