SAA liquidation more devastating for workers than business rescue
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JOHANNESBURG - The Department of Public Enterprises (DPE) has urged workers unions at South African Airways (SAA) to vote in favour of the airline’s business rescue plan in a bid to avoid a drawn out liquidation process.
SAA business rescue practitioners (BRPs) have scheduled a creditors’ meeting for July 14 to vote on the business rescue plan.
A vote in favour of the plan by 75 percent of the voting interests would be required to carry the vote,
The DPE said a vote against the plan would result in the protracted and costly liquidation of the airline.
It said that liquidation, the process of winding down the airline and disposing of its assets, would lead to financial hardship for employees and substantial undervaluation of assets.
“As the shareholder on behalf of the government, we are of the view that business rescue is a viable alternative to liquidation,” it said.
“During the drawn-out process, creditors would in all likelihood receive a negligible dividend after all secured and preferred creditors have been paid in the liquidation proceedings.
“Therefore it stands to reason that generally, business rescue dividends should result
in a higher return for creditors than would result in a liquidation situation.”
SAA rescuers plan has requested that the government sets aside R2.2 billion for voluntary severance packages, as part of the overall R27bn bailout, in order to reduce SAA employees from 4 700 to 1 000.
In an event SAA goes into liquidation, employees would receive a maximum of R32 000 per staff member, regardless of years of service, if there are still funds available after paying secured and preferred creditors.
Last week, the DPE withdrew its participation from the leadership consultative forum which was created as an engagement platform between the department and unions over the business rescue plan.