iscover
Bonza’s administrator will have until the end of July to save the low-cost carrier after successfully arguing for an extension to its appointment.
In the Federal Court on Monday, Hall Chadwick argued that while around 300 employees remain in a “period of uncertainty” as they are stood down without pay and cannot claim certain benefits until the company is wound up, they and other creditors would be better off if the airline is sold.
Barrister James Hutton told Justice Ian Jackman that the airline’s most valuable asset is its Air Operator’s Certificate (AOC), which is more likely to be cancelled if Bonza is liquidated.
“Given the nature of the uplift that can be expected if the business is sold as a going concern and the value of the AOC is able to be realised, Your Honour could reasonably anticipate that extension of the administration or the convening period so as to enable an extension of the administration has the very real prospect of significantly improving the position of creditors, including employee creditors,” he said.
“[Employees] have the possibility of receiving a greater recovery than they would receive under the [Fair Entitlements Guarantee], and that possibility is enhanced if the competing period is extended, and secondly, they have the possibility of continuing employment with Bonza, which is not a possibility that will be open in the event that the company goes into liquidation.”
Justice Jackman accepted Hall Chadwick’s arguments, granting a two-month extension to the appointment – which was to end on 29 May – until 29 July.
“I accept that the extension of the convening period sought is in the best interest of the creditors of the company and the extensions sought should be granted,” he said in his decision.
“The sale process which the administrators are currently undertaking offers the best prospect of a substantial return to creditors. The administrator’s view is that a sale of the business and execution of a [Deed of Company Arrangement] is likely to result in a better outcome for creditors than immediate liquidation.
“If the convening period is not extended, it is very likely that the administrators would have no option but to recommend to creditors that Bonza would be wound up.”
Bonza has not flown since it entered voluntary administration at the end of April.
Hall Chadwick indicated earlier this month that it was speaking with around 20 interested parties, including investors, airlines and travel companies, with six “very interested”, though one potential buyer, Vietnamese low-cost carrier VietJet, has since walked away.
Details of other interested parties are currently under a non-publication order.
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says:Seriously, in the best interests of the workers of whatever category this enterprise should be wound up. Any extension of time to identify and confirm a possible buyer/investor does nothing but increase the return for the administrators at the expense of those who have put in the hard yards to try and achieve a positive outcome. Enough is enough. I said many moons ago that the kindest thing that could happen to the intending “Bonza” was to not grant it at an AOC. – maybe I was right after all!