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IOL News
5 days ago
- Business
- IOL News
Mango airline's business rescue plan faces setback as court ruling is challenged
Mango's business rescue practitioner is challenging the Gauteng High Court, Johannesburg, ruling declaring the plan to save the state-owned low-cost airline unimplementable. Image: File The business rescue practitioner (BRP) of grounded low-cost airline Mango is challenging the Gauteng High Court, Johannesburg, judgment declaring the plan to save the state-owned company unimplementable. BRP Sipho Sono has filed an application for leave to appeal Judge Denise Fisher's ruling handed down last month. Judge Fisher found that the plan, stripped of its complexity, amounts to nothing more than the confiscation of creditors' claims to be transferred by Sono to an investor who pays no value for them or the shares. She ordered: 'The compulsory cession contained in clause 6.2.6 of the business rescue plan is declared to be invalid and of no force and effect. It is declared that the business rescue plan cannot be implemented'. Judge Fisher said Sono's opposition to Aviation Co-ordination Services' (ACS's) application was unmeritorious. ACS, which provided security-related services such as baggage and cargo screening services, baggage reconciliation and check-in services, hauled Mango and Sono to court over the plan to save the subsidiary of South African Airways. The company is one of the creditors owed about R2.91 billion by Mango before it was placed under business rescue in July 2021 and is owed over R23.3 million. ACS complained that its estimated settlement would translate roughly to R44,300 per R1m, a return which it described as negligible, if not nominal. Sono has indicated that there are sufficient funds to pay a dividend of more than the 4.43 cents to each rand owed, as estimated in the business rescue plan. In the challenge to Judge Fisher's judgment, Sono stated that the court's findings that a business rescue plan cannot provide for an involuntary cession against non-acceding creditors was made as a principle that is far-reaching and has implications that extend beyond the present dispute and constitute a compelling reason why leave to appeal should be granted. 'The decision involves a question of law which is important, as the decision is of general application, affecting all business rescue plans that entail an involuntary cession, including against non-acceding creditors, which is a common feature of business rescue plans,' he explained. Mango and Sono want to be granted leave to appeal to the Supreme Court of Appeal and believe there are reasonable prospects of success. Sono defended the appeal, asserting his right to pursue litigation if he reasonably believes that a favourable outcome for Mango will benefit all affected parties. 'The BRP will continue to act and take such steps as he reasonably believes are in the best interests of all affected persons, notwithstanding the various threats made by ACS and its legal representatives, which are regrettable, inflammatory, and achieve no legitimate purpose,' he added. According to Sono, ACS's intentions remain unclear but on the face of it, it would seem that the company prefers a situation where the potential investor withdraws and Mango is wound up. 'It is not clear why such an outcome would be favourable to ACS, who during the height of Mango's operations generated approximately R70m per annum in revenue,' he added. [email protected]
The South African
09-07-2025
- Business
- The South African
Mango Airlines' return to the sky hits major stumbling block
In a major blow to Mango Airlines' long-delayed comeback, the Gauteng High Court in Johannesburg has ruled that the state-owned low-cost carrier's business rescue plan cannot be implemented, casting fresh doubt on the future of the airline, which has been grounded since July 2021. The ruling follows a legal challenge from Aviation Co-ordination Services (ACS) – a key creditor owed approximately R2.91 billion – who questioned both the fairness and viability of the proposed rescue strategy, which was developed by business rescue practitioner Sipho Sono. ACS, responsible for vital aviation services such as baggage and cargo screening, argued that the plan grossly undervalued creditor compensation, offering only 4.43 cents on the rand. Describing the offer as 'negligible, if not nominal,' ACS claimed the plan lacked a solid foundation for long-term financial recovery. When Mango entered business rescue in 2021, the airline had few tangible assets, with most of its operational capacity dependent on leased aircraft and infrastructure. The business rescue plan included a controversial compulsory cession clause, which the court has now declared 'invalid and of no force and effect.' In a scathing critique, Judge Fisher rejected Sono's opposition to the ACS application, describing it as 'unmeritorious' and raising further questions about the fragility of the airline's recovery efforts. Despite the setback, Sono has instructed his legal team to appeal the judgment, attempting to salvage a rescue plan that has been years in the making. However, the road ahead appears increasingly uncertain, with ongoing negotiations with creditors and the urgent need for investment looming large. The prolonged grounding of Mango has not only crippled its operations but also affected countless employees, customers, and industry stakeholders, highlighting the broader challenges plaguing South Africa's aviation sector amid continued economic volatility. The full court judgment is available via the Southern African Legal Information Institute (SAFLII). Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
IOL News
03-07-2025
- Business
- IOL News
Mango Airlines faces legal challenges in its business rescue plan
State-owned Mango appears no closer to the skies again, four years after the low-cost airline was grounded in July 2021, as legal challenges intensify. Image: File Troubled state-owned low-cost airline Mango's business rescue practitioner (BRP), Sipho Sono, has instructed his legal representatives to appeal against the Gauteng High Court, Johannesburg, judgment stopping the implementation of its business rescue plan. The move follows Judge Denise Fisher finding that 'the plan, shorn of its complexity, amounts to nothing more than the confiscation of the creditors' claims in order that they be transferred by Sono to an investor who pays no value for them or the shares'. The matter was brought by Aviation Co-ordination Services (ACS), which provided security-related services such as baggage and cargo screening services, baggage reconciliation, and check-in services. The company hauled Mango and Sono to court over the plan to save the South African Airways subsidiary. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ ACS is among dozens of creditors owed about R2.91 billion by Mango before it was placed under business rescue in July 2021. Mango owes ACS over R23.3 million and was among the creditors who voted against Sono's business rescue plan approved by 98% of the voting creditors. ACS objected to a payment to the creditors (clause 6.2.6) in the plan, stating that all of the remaining balance of the claims of the remaining concurrent creditors will be ceded to the investor at face value thereof, but for nominal consideration. In his latest communication all affected parties, Sono indicated that on June 17, the Gauteng High Court, Johannesburg, handed down a judgment in the application launched by ACS in terms of which it declared the compulsory cession contained in clause 6.2.6 of the business rescue plan was declared invalid and of no force and effect. The court also declared that the business rescue plan cannot be implemented. 'Since the handing down of the judgment, the BRP has carefully studied the judgment and consulted with his legal representatives,' Sono explained. The BRP said following the engagements with his lawyers, he intends to apply for leave to appeal against the whole judgment. He has accordingly instructed his legal representatives to prepare the necessary documents for purposes of noting the appeal and undertook to provide further updates on the status of the appeal in due course.
IOL News
19-06-2025
- Business
- IOL News
Court halts Mango airline's business rescue plan
State-owned Mango's step towards resuming flights does not appear to be any closer, four years after the low-cost airline was grounded in July 2021. This follows a Gauteng High Court, Johannesburg ruling that its business rescue plan cannot be implemented. Image: File The process of reviving state-owned low-cost airline Mango appears to have been stopped after the Gauteng High Court, Johannesburg declared that its business rescue plan cannot be implemented. Aviation Co-ordination Services (ACS) hauled Mango and its business rescue practitioner Sipho Sono to court over the plan to save the subsidiary of South African Airways (SAA). ACS, which provided security-related services such as baggage and cargo screening services, baggage reconciliation and check-in services, is among dozens of creditors owed about R2.91 billion by Mango before it was placed under business rescue in July 2021. At the time it was placed under business rescue, Mango did not own any material assets as its most significant assets were leased. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading In September 2021, a couple of months after being placed under business rescue the only asset on Mango's balance sheet was a spare engine bought by SAA for US$9.6m with the lowest indicative offer received in the last 12 months being around US$2m (R30m then). Mango also had an un-flown ticket liability of about R183m at the start of the business rescue through its full value voucher system. ACS is owed over R23.3 million by the SAA subsidiary and was among the creditors who voted against Sono's business rescue plan, which was approved by 98% of the voting creditors. The company objected to a payment to the creditors (clause 6.2.6) in the plan stating that all of the remaining balance of the claims of the remaining concurrent creditors will be ceded to the investor at face value thereof but for nominal consideration. It also indicated that the concurrent creditors, except the SA Revenue Service and the creditors in respect of the un-flown ticket liability, will be paid a "top up" settlement payment for their claims. This meant that the majority of the creditors would be paid 4.43 cents to every rand. ACS complained that the estimated settlement would translate roughly to R44,300 per R1m, a return which is negligible, if not nominal. In addition to the debt acquired by the investor through the cession of the claims of concurrent creditors may be converted to equity (or quasi equity instrument), subordinated or otherwise be dealt with in such manner that Mango will be restored to solvency. On Tuesday, Judge Denise Fisher found that 'the plan, shorn of its complexity, amounts to nothing more than the confiscation of the creditors' claims in order that they be transferred by Sono to an investor who pays no value for them or the shares'. 'The compulsory cession contained in clause 6.2.6 of the business rescue plan is declared to be invalid and of no force and effect. It is declared that the business rescue plan cannot be implemented,' the judge ordered. Judge Fisher said Sono's opposition of ACS's application was unmeritorious. Earlier this month, Sono announced Mango's plans to resume operations and requested passengers with un-flown tickets to register on its website, promising full value refunds once it takes to the skies again after four years. Sono did not respond to requests for comment on Thursday.
