Mango rescue practitioner seeks order for decision from Gordhan despite appeal

Mango’s business rescue practitioner has applied to the high court for an order to force public enterprises minister Pravin Gordhan to make a decision on the proposed sale of the troubled airline despite the minister applying for leave to appeal that ruling.

“The financially distressed Mango’s survival is at stake,” Sipho Sono says in court documents, seen by Business Day. He says he is bringing the application in the public interest and that of affected creditors.

“The achievement of the objectives of the business rescue plan will become impermissibly thwarted in the event they are delayed as a result of the application for leave to appeal,” Sono states.

In September, the high court issued an order declaring Gordhan’s failure to take a decision in respect of an application in terms of the Public Finance Management Act (PFMA) for the proposed sale, and submitted to him in November last year, was unlawful and constitutionally invalid. Gordhan had 30 days to make a decision and provide reasons for it, failing which, it could be presumed the application was approved.

Gordhan and his department subsequently launched an application for leave to appeal, which suspended the implementation of the court ruling.

Sono now wants the court to rule that its order remains effective notwithstanding the appeal application, arguing that Mango is in a state of advanced business rescue proceedings and its financial survival is dependent on the immediate finalisation of those proceedings.

“The successful implementation of Mango's business rescue plan will result in a relaunched airline and increased competition, and potentially contribute towards better pricing [in the industry],” states Sono. However, the chosen investor cannot be “left in limbo indefinitely”, especially since a full appeals process, including, if need be, up to the Constitutional Court, could take between two-and-a-half and four years to be completed.

The result could be that the investor will withdraw and Sono will have no choice but to wind Mango down. In that case, employees and post-commencement creditors will get 100 cents in the rand and pre-commencement concurrent creditors just 4.43 cents in the rand.

“The winding up of Mango would result in the permanent exit of a competitor in the domestic and regional aviation market in an environment where there are already very few players and inflated air fares,” Sono adds. “The minister retains the right to decide whether or not to grant the application.”

In response to Sono’s, application, the department of public enterprises said on Thursday it “notes the court application by the business rescue practitioner of Mango. The department will oppose the application.”

Sono has claimed previously that Gordhan wanted to see the business case of the selected investor before making a decision. Sono, however, is concerned about sharing such information as Mango is likely to compete with its parent company, state-owned SAA.

Gordhan and the department said in their court application that all aspects of Mango’s business rescue process “are transparent, legally sound and in the best interest of the SA public”. They denied it is a stalling tactic or an attempt to undermine the need to bring finality to the business rescue.

The department said Gordhan is still awaiting information from Sono to enable him to make the decision on the PFMA application. That includes a detailed business plan to assess the viability of the consortium selected by the business rescue practitioner to buy Mango, comprehensive due diligence, and foreign ownership details to comply with SA laws.

In his latest court application, however, Sono says he has made it abundantly clear in the past that no further information will be forthcoming apart from what has already been provided to the department and the minister.

“I have provided the minister with Mango's rescue plan in January 2023, and a due diligence report, which he rejected as inadequate without giving reasons. The minister was also informed that all the consortium members [who want to buy Mango] are resident in SA and there is no foreign ownership. He has refused to accept this, despite being in possession of the ID copies of the owners,” states Sono.

Sono had hoped Mango could restart operations in December 2021 to benefit from the peak summer holiday season. However, Gordhan stipulated that an investor had to be found to get Mango off the ground again. He would, therefore, not allow the R819m allocated to Mango from government funding for SAA’s own business rescue to be used to get the airline operational