Cabinet approves Air Namibia liquidation

Government is making frantic last-minute efforts to ensure the Belgium outfit does not lay its hands on the airline’s assets after Cabinet approved voluntary liquidation.

11 February 2021 | Transport

OGONE TLHAGE







WINDHOEK

Cabinet has approved the voluntary liquidation of Air Namibia, and a three-person board of directors has been appointed to help safeguard the airline’s assets from being attached in case of failure to pay Challenge Air N$107 million next week.

Lawyer Norman Tjombe, businesswoman Hilda Basson-Namundjebo and economist James Cumming have been appointed in part to assist interim CEO Theo Mberirua in ensuring the airline’s assets are protected.

“All efforts must be made to protect the assets of the company,” public enterprises minister Leon Jooste wrote yesterday.

“The resolution must be registered by the Business and Intellectual Property Authority (for voluntary liquidation) before 18 February to ensure that Challenge cannot attach any Air Namibia assets,” the minister further wrote.

It is unlikely that Air Namibia is in a position to honour its promise of paying N$107 million next week to the Belgian outfit as part of a settlement agreement reached over a week ago.

The agreement, whose granular details government has distanced itself from, was reached to pour cold water over Challenge Air’s application to have Air Namibia liquidated.

‘We can execute immediately’

Namibian Sun now understands that government, the sole shareholder in Air Namibia, has resolved for a voluntary liquidation of the company.

Jooste last week told Namibian Sun that government would not release any funds to Air Namibia for its obligations towards Challenge Air.

His directive to safeguard the airline’s assets has been met with discord by the Challenge Air legal team, which told Namibian Sun yesterday that any deviation from the terms of the settlement agreement would result in direct liquidation of the national airline.

“The agreed terms of the settlement agreement, which have been ratified by court, are sufficient for purposes of execution,” a member of the Challenge Air legal team said yesterday.

“If there’s any breach, there’s no need to return to court any more. We can execute immediately. There’s a clause in that agreement that clearly states that any failure to adhere to the agreed terms will result in the attachment of assets.”

12 months’ salary for employees

A meeting between the unions representing Air Namibia employees and the ministry of finance is expected to take place this afternoon to formally communicate the decision to voluntary liquidate the company.

“We will also explain that Cabinet has approved for the employees to receive ex-gratia payment [payment without admittance of liability] to the value of 12 months’ salary, and that this amount will be disburse over a 12-month period,” Jooste wrote yesterday.

Liquidators will be obliged to pay employees severance packages, notes seen by Namibian Sun indicate.

How we got here

Confrontations ensued from a long-standing dispute over the lease of a defective Boeing 767 aircraft Challenge Air provided to Air Namibia. The flag-carrier was sued over the non-payment of maintenance, insurance and lease of the aircraft.

The airline’s previous board, led by lawyer Escher Luanda and consisting of pilot Alois Nyandoro, chartered accountant Willy Mertens and human resources practitioner Heritha Muyoba, committed the company to settling debt to Challenge Air amounting to N$180 million to avoid a liquidation judgement taking order.

Challenge Air and Air Namibia had agreed to a payment plan to settle the debt on 29 January. The airline’s board, however, abruptly resigned, leaving its 676 employees in limbo.

In an effort to save the airline, government in 2019 approached all airlines currently operating in Namibia as well as those that intend to operate here to assess the possibility of strategic partnerships or investment in Air Namibia, which all parties declined.

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