The business rescue practitioners (BRPs) for financially-beleaguered State-owned national flag carrier South African Airways (SAA) have had to call for an urgent (virtual) meeting of the airline’s creditors, to consider amending the business rescue plan for SAA. The email notice announcing this was released at 18h46 on Thursday evening, with the meeting scheduled for 10h00 Friday morning, giving just over 15 hours notice to the creditors.

The reason for this action was the failure of the government to so far fulfil an essential condition required for the implementation of the business rescue plan. To be implemented, the business rescue plan needed to obtain six key approvals, listed in the plan’s paragraph 42.1. Five of these have now been obtained.

“The outstanding condition is in relation to the guarantee confirmation letter that is required [from the government] by the Lenders, which was prepared and sent to government for sign off,” stated the document issued by the BRPs explaining why the meeting had been called. “On 22 July 2020, the Lenders expressed their dissatisfaction with the form of the letter and engagements began between the Lenders, the company and government in relation to the final form of the letter, which was agreed on in the evening of 22 July 2020.”

“The guarantee confirmation letter has not yet been provided to the company therefore we are required to convene the meeting as set out in paragraph 42.2 of the business rescue plan,” they added. The proposal was to amend that same paragraph 42.2.

The proposed amendment stated that, if all the conditions required by paragraph 42.1 (in practice, the provision of a satisfactory guarantee confirmation letter by the government) were not met by July 27, then a creditors’ meeting would take place on July 30. The purpose of this meeting would be for the creditors “to consider amending the business rescue plan, failing which for the BRPs to discharge the business rescue”.

The BRPs did express some optimism that a signed guarantee confirmation letter would be given to them before Friday’s meeting. SAA has been under business rescue since early December.