Comair’s business rescue practitioners have lodged a court application on Thursday to convert the business rescue proceedings into liquidation proceedings.
This is because the company could not raise the necessary funding to continue with operations.
In a notice, published on Thursday, the BRPs advised creditors that they no longer believe there is a reasonable prospect that the company can be rescued.
The BRPs tasked the Comair Rescue Consortium (CRC), the current owner, to come up with a practical plan for continued operations by 31 May this year.
This included raising additional funding “to settle all financial obligations as they fall due in the ordinary course of business” and to negotiate with lenders about arrears amounts.
When this did not happen, the BRPs suspended all Comair’s kulula.com and British Airways (operated by Comair) flights on 1 June.
Comair, which has been flying planes in South Africa since 1946, has been in business rescue for the past two years. The CRC invested R500 million for a 99% share of the equity in the company at the time.
While the pandemic decimated its business, its debt burden has been growing for years, partly as a result of a disastrous order of Boeing 737 Max planes.
It paid $45 million in deposits for eight of the planes. It already had one delivered when a worldwide grounding of the planes was declared between March 2019 and December 2020 following two fatal crashes. Comair’s legal battle in a US court to cancel the purchase agreement of the 737 Max planes from US manufacturer Boeing is still ongoing.