With recent reports of SAA having reinstated insolvency cover on its tickets, and with global travel firm Flight Centre having lifted its suspension of the sale of seats on SAA flights, South Africans are starting to see the effect of the business rescue mechanism at SAA, and the potential for a turnaround at the ailing carrier.
The business rescue plan has as its objective the maximisation of the likelihood of the company continuing in existence on a solvent basis; or if it is not possible to do so, to achieve a position that would result in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company.
Much has been made in the media about “ongoing interference” by the government and trade unions in the business rescue process, with reports suggesting that the business rescue practitioners cannot act independently when being dictated to by such parties. Recently, the government has been quite emphatic about intervening in the business rescue process if the restructuring “is not in the best interests of SAA”.
The practitioners’ directives are clearly set out in section 7 of the Companies Act — business rescue is aimed at providing for the efficient rescue and recovery of financially distressed companies, in a manner that balances the rights and interests of all relevant stakeholders.
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