A guide to Air Namibiau2019s liquidation
A guide to Air Namibiau2019s liquidation

A guide to Air Namibia’s liquidation

Cindy Van Wyk
OGONE TLHAGE



WINDHOEK

Government has finally pronounced that it will liquidate Air Namibia. To make sense of the announcement, Namibian Sun - through the help of analysts - unpacks the move and its consequences.

Liquidation is entered into when a company is unable to meet its obligations or when its liabilities (what it owes), exceeds its assets (what it owns).

Air Namibia’s voluntary liquidation simplified:

· Independent registered liquidator to take control of Air Namibia so its affairs can be wound up in an orderly and fair way to benefit creditors.

· Challenge Air and other creditors cannot commence or continue legal action against Air Namibia.

· Liquidator will have authority to sell the assets of Air Namibia to settle the airline’s debts to creditors.

· Liquidator to distribute money from the collection and sale of Air Namibia assets to creditors, including employees, and then to unsecured creditors.

“In practical terms, it means that the liquidator will be appointed and that liquidator will have authority to sell the assets of the company to settle debt of the company. The shareholders lose out and the creditors take priory,” a lawyer, who preferred to remain anonymous, explained to Namibian Sun.

The assets

Air Namibia’s assets, which include four Embraer 135 regional jets and two Airbus A319 aircraft as well as an office building, could be attached, assessed and sold off, according to the lawyer.

“Air Namibia has assets; it has planes, it has buildings, and so forth. All of that will be collected and assessed and sold off at favourable prices.”

There may be instances, however, where Air Namibia would have taken out loans to purchase assets. This, he explained, would need to be secured.

“Some assets have securities against them. For example, the planes are unlikely to belong to Air Namibia itself. Some may belong to Air Namibia, like the small domestic fleet, and some may belong to foreign entities on loan,” the lawyer explained.

“If it owns planes it uses domestically, those assets can be sold off, but there may be a loan on those planes and they are paying off that loan, so in order to guarantee the loan, they secured those planes - so those banks will take priority in order to be paid back,” he added.

Giving a hypothetical example, the lawyer said a creditor would potentially only be able to secure partial settlements in instances where assets are sold.

“For a N$20 million loan and you sell the plane for N$15 million, that whole N$15 million minus the cost of selling that plane - which will be N$500 000 - would go to the lender in order to settle that loan amount,” he said.

Unsecure loans

Commenting on the unsecured portion of the loan, Air Namibia would still be liable to pay, albeit not 100%, he said.

Looking at the hypothetical example again, he explained: “There would still be N$5.5 million that is owed to the lender, but that N$5 million is not secured. The lender will then become an unsecured lender for that N$5 million. Generally, you are paid per dollar owed to you, a percentage per dollar owed to you. All those unsecured creditors will be paid a percentage”.

What is then paid to creditors would depend on what has been raised from the liquidity versus what is owed in total.

“If a company owes its entire creditors a set amount of N$40 million but could only raise N$20 million, that is 50% of the amount, you will be paid N$50 per dollar. That is the percentage they will arrive at, plus liquidation fees, which will run into the millions,” he said.

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Namibian Sun 2025-07-12

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