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A final order for the liquidation of Velvet Sky has been granted, despite last ditch efforts by the broke airline to secure an adjournment.
In an 11th hour move on Thursday, a proposal was submitted to the Pietermaritzburg High Court requesting a postponement of the final liquidation order.
This was pending a full investigation by the liquidators of the proposal, which was being made by the JB Group, a family-owned property development business, on behalf of one of the airline’s creditors.
The company was offering to pay Velvet Sky’s creditors 5c to the rand of the amount they were owed in exchange for the airline’s licence.
This was the airline’s only viable asset, according to the JB Group’s advocate, Vershen Moodley.
“We believe that it would be more beneficial for the creditors to see this proposal through. A postponement of the liquidation would not prejudice the creditors in any way,” Moodley said.
However, Gerhard Roberts, arguing for BP Southern Africa, one of Velvet Sky’s largest creditors, said that the proposal was simply an attempt to “postpone the inevitable”.
Roberts argued that there was no formal documentation before the court of this new proposal by the JB Group, which did not bode well.
“It is clear as day that the airline is insolvent. Being paid 5c to the rand cannot be beneficial to creditors, and neither can a postponement of the liquidation. The company needs to be wound up and creditors need to be paid,” Roberts said.
“It is time for everyone to accept that Velvet Sky will never see the sky again,” he said.
Judge Phillip Nkosi agreed with Roberts that he was not persuaded that a further adjournment of the liquidation would benefit the creditors.
“A lot of time has been spent attending to this matter before the courts, and I simply don’t believe that Velvet Sky’s creditors would be better off in terms of this proposal, which is still in its infancy stage.
“The application for an adjournment is refused and the order for the final winding up of the company is confirmed,” Nkosi said.
Speaking to the Daily News after the order was confirmed, chief executive for JB Group, Joosub Guy, said he was disappointed that the court had not seen the value in his company’s proposal.
“If our proposal was granted, the airline’s creditors would have been paid (5c to the rand) and we would have re-employed 140 people and renewed passengers faith in the airline. Now those 140 people are out of jobs and passengers will never recover their ticket costs,” Guy said.
The granting of the final order of liquidation has also had the effect of nullifying Velvet Sky’s licence.
Velvet Sky was grounded in February this year after declaring themselves insolvent.
On February 24, BP applied to the high court for the provisional liquidation of the airline, which allegedly owed it R29 million for aviation fuel.
In court papers filed in March, the airline confirmed it had debts of about R100m and that its only assets were desks, chairs and computers.
In April, the airline fought the application by BP to have it liquidated, citing a business rescue plan to save it.
This business plan never came to fruition.