A guide to Air Namibia’s liquidation

12 February 2021 | Transport

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.

Similar News

 

NABTA calls for toll gates

1 week ago - 17 June 2021 | Transport

OGONE TLHAGE WINDHOEKThe Namibia Bus and Taxi Association (NABTA) has called for the introduction...

NABTA calls for toll gates

1 week ago - 16 June 2021 | Transport

OGONE TLHAGE WINDHOEKThe Namibia Bus and Taxi Association (NABTA) has called for the introduction of toll gates to level the playing field...

Old railway to blame for accidents

3 weeks ago - 31 May 2021 | Transport

TANJA BAUSE WINDHOEKIn the last four months, six TransNamib locomotives and 42 wagons...

Walvis Bay ranks above SA harbours

3 weeks ago - 28 May 2021 | Transport

ELLANIE SMIT WINDHOEK The Port of Walvis Bay has been ranked above South African...

N$278m payment for Air Namibia staff

1 month - 06 May 2021 | Transport

OGONE TLHAGE WINDHOEKGovernment has paid part of N$278 million reserved for ex-gratia payments to...

Taxi union wants 10% increase

1 month - 03 May 2021 | Transport

ELLANIE SMIT WINDHOEKThe taxi union wants a 10% increase in taxi fares, effective 15...

TransNamib needs to double its locomotives

1 month - 03 May 2021 | Transport

ELLANIE SMIT WINDHOEKTransNamib will need to double the number of locomotives it has at...

Jooste dispels lease lawsuit fears

1 month - 29 April 2021 | Transport

OGONE TLHAGE WINDHOEKPublic enterprises minister Leon Jooste has given his assurance that government will not be sued over the cancellation of a...

Vivo Energy Namibia rewards top retailers

2 months ago - 15 April 2021 | Transport

Staff reporter Vivo Energy Namibia, the marketer and distributor of Shell branded petroleum and lubricant products in Namibia, recognised and rewarded top performing retailers...

Swakop tracks cleared after accident

2 months ago - 09 April 2021 | Transport

IRENE-MARI VAN DER WALT SWAKOPMUND The scene of the railway crash in...

Latest News

Ex-striking NBC employees fight for...

2 hours ago | Labour

OGONE TLHAGE WINDHOEKDespite agreeing to the principle of ‘no work, no pay’ for their strike nearly two months ago, NBC employees who...

Working in the shadow of...

2 hours ago | Health

JEMIMA BEUKES · Clinics turned into hospitals · Nurses...

Cape Verde to renationalise its...

2 hours ago | Economics

Cape Verde's government said Monday that it is taking over the national airline over concerns for its future, after selling a majority stake in 2019.Speaking...

Sudan eliminates customs exchange rate...

2 hours ago | Economics

Sudan has eliminated its customs exchange rate, used to calculate import duties, as the final step in a devaluation of its local currency, the finance...

Nigeria considers equity fund to...

2 hours ago | Economics

Nigeria is considering the set-up of a private equity fund as part of its effort to fight poverty in Africa's most populous nation and has...

EDITORIAL: Violence ranking expected

2 hours ago | Opinion

According to the 15th edition of the Global Peace Index (GPI), Namibia is the country where the experience of violence is the greatest worldwide.It said...

Shoprite, Dunnhumby renew partnership in...

2 hours ago | Business

Shoprite and Dunnhumby have announced the renewal of their partnership in Africa. Shoprite, the largest grocery retailer in Africa with over 500 stores and 20...

Heineken takes control of India's...

2 hours ago | Business

Heineken NV, the world's second largest beer maker, has taken control of India's largest brewer United Breweries Limited (UBL), cementing its position in a vast...

ECN ordered to avail spoilt...

2 hours ago | Politics

Kenya Kambowe RUNDUThe Electoral Commission of Namibia (ECN) has been ordered by the electoral court to allow the All People’s Party (APP) access to the...

Load More