It has been reported that airline carrier Mango, currently under business rescue, may be purchased and that the practitioner is awaiting confirmation of funding as well as a bank guarantee from a potential buyer.
During Business Rescue proceedings there are various mechanisms that can be used by a practitioner to ensure that the company under business rescue returns to a healthy financial status.
In general, irrespective of the steps that are taken, it is of utmost importance that the practitioner properly communicates the steps that are to be taken during the proceedings and more specifically allow for a business rescue plan to be approved by the distressed companies' creditors.
Practitioners will attempt to place a distressed company in a position where it can trade in such a way that it will recover over a period of time whilst settling the debt due to its creditors. Alternatively, some of the distressed company's assets, or the business as a whole can be sold to a third party and the proceeds of the sale utilised to settle the claims proved by creditors during the business rescue proceedings.
The determination as to percentage of each creditors claim would be determined by a combination of the terms of the approved business rescue plan and the terms of a potential sale to a third party, which would also need to be approved by creditors.
In the case of the latest Mango Airlines news, there have been reports that, in the event of liquidation, creditors may expect a return of 10c in the Rand, which would serve as further incentive for a successful sale to be concluded.
The practitioner will be necessitated to commence liquidation proceedings in the event of the sale not transpiring and no further alternative is found to rescue the company.
Mango has not been operational since July 2021 and the Air Services Licensing Counsel has proceeded the suspend its operating licenses.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.