Low-cost airline Velvet Sky has been liquidated. Judge Phillip Nkosi of the Pietermaritzburg High Court yesterday rejected a request for an adjournment and said he did not believe it would be in the interests of creditors.
Fuel companies earlier this year stopped supplying Velvet Sky when bills were not paid, Business Day newspaper reported today. In February, BP Southern Africa launched an application for provisional liquidation, citing the non-payment of a R28.7 million fuel bill. During earlier hearings, the court heard that Velvet Sky owed almost R100 million to its creditors.
The South African Press Association added Advocate Gerrie Roberts, for BP Southern Africa, said Velvet Sky’s application for a further adjournment, yesterday, only delayed the inevitable liquidation. Nkosi agreed.
The low-cost airline was placed under provisional liquidation in May. At the time, presiding Judge Shyam Gyanda dismissed a second application, by Umzamo Transport Services, for a business rescue plan to be implemented. He said the application provided scant detail and might be a ploy to delay liquidation proceedings.
The order renders its operating licence useless, The Mercury newspaper said. Explaining their latest application after the court case, Velvet Sky’s CEO, Joosub Guy, said this arrangement would have meant that the creditors would have received some money. In return, the group would have resumed the airline’s operations and re-employed staff. Asked how the JB Group would have benefited, Guy said it would “achieve the operating licence”, which took several years to apply for. The court had heard the airline did not have any assets of value and that the only thing worth something was the operating licence.
Velvet Sky launched with some fanfare in March last year, planning to fly the “golden triangle” between Johannesburg, Durban and Cape Town. “Durban’s first ever airline is ready for take-off,” Velvet Sky said at its launch. “Having spent the last two years assessing the trends and demands of the airline industry, we are extremely eager to enter this market and believe that now is, without doubt, the perfect time to do so,” said chairman Cecil Reddy. “Velvet Sky will offer passengers more choice when making their travel arrangements through realistic scheduling, competitive pricing and adding capacity to the busier routes,” he said.