Velvet Sky goes down fightingComment on this story
Velvet Sky will not take to the skies again as a final liquidation order has been granted against the airline by the High Court in Pietermaritzburg.
The order renders its operating licence useless and spells the end for the beleaguered airline, which has been grounded since February. It did not go down without a fight.
A last-ditch attempt to forestall its fate by seeking another adjournment did not sit well with Judge Phillip Nkosi, who said he was not persuaded that this would be better for the airline’s creditors.
“I do not believe the creditors would be better off with an adjournment,” he said.
Judge Nkosi had rejected an offer by a Joburg company, the JB Group, to free the airline of some of its debt by paying creditors five cents in the rand of the money owed them.
Explaining this after the court case, the group’s CEO, Joosub Guy, said this arrangement would have meant that the creditors would have received some money.
In return, the group would have resumed the airline’s operations and re-employed staff. Asked how the JB Group would have benefited, Guy said it would “achieve the operating licence”, which took several years to apply for.
The court had heard the airline did not have any assets of value and that the only thing worth something was the operating licence.
The liquidation application was brought in February by BP Southern Africa, which was owed R29 million.
The company agreed to an adjournment to enable another of the airline’s creditors, Umzamo Transport, to propose a business rescue plan to bail out the airline.
When the matter came before court again, however, there was no mention of Umzamo’s plan.
Instead, Velvet Sky’s advocate, Mergen Chetty, submitted that the airline was in negotiations with the Malawian government to find a way to keep it aloft.
Chetty pleaded with the court not to grant a provisional liquidation order and to allow the airline time to submit a business rescue plan.
The court, however, believed that doing so would create a false impression with potential investors that the latest proposal was viable.
It granted a provisional liquidation order and said that as this was not final, the airline would have time to draft papers on the business plan.
When the matter came before the court on Thursday, there was no mention of a deal with Malawi, but the court was told of the JB Group’s proposal.