The busines rescue practitioner of Mango Airlines (MNO, Johannesburg O.R. Tambo) is instituting urgent legal action against South Africa's public enterprises Minister, Pravin Gordhan, to compel him to decide on the proposed sale of the defunct budget subsidiary of South African Airways (SA, Johannesburg O.R. Tambo) to an as-yet-unnamed preferred bidder.

The urgent application will be heard at the end of February, and judgment should be delivered shortly thereafter, said provisional liquidator Sipho Sono in his January report back to creditors. Barring any appeals or delays with the judgment, Sono was hopeful that Gordhan would decide on Mango's sale in the next two months.

From the feedback to creditors, it appears that Sono and Gordhan are on a war path over the proposed sale of Mango. Sono has slammed what he called the "recalcitrance of the Minister", which he charged was putting at risk the potential rescue of the airline. For his part, Gordhan has dismissed Sono's comments, claiming the provisional liquidator has no authority to address him directly about the proposed deal.

Sono warned that the preferred bidder had indicated he would withdraw if Gordhan did not take a decision by February 28, 2023, but was persuaded to await the outcome of the legal proceedings.

At issue is Gordhan's consistent refusal to sign off the proposed deal until SAA provides him with certain, undisclosed information he has asked for.

Approached for comment, the Department of Public Enterprises (DPE) referred to SAA, which subsequently released a statement saying that Gordhan's requests for more information on the proposed investor was legitimate. SAA's interim chairman and Chief Executive Officer, John Lamola, said: "SAA supports the Minister and the DPE in their opposition of Mr Sono's court application and will continue with its search and demand for the information required to complete the PFMA [Public Finance Management Act] application for Mango's proper disposal".

SAA said Sono had announced preferred investors a number of times before but failed to furnish details. "He would refuse to disclose to SAA and DPE the names of these preferred bidders even though Mango shares are SAA's property, and we are within our rights to know the identity of the bidders. In the final instance, when a bidder was eventually disclosed to SAA, and we fairly pointed out a reasonable material conflict, this present dispute erupted around the nature of the due diligence required on the now-restructured prospective investor and their business plan," the airline stated.

Sono told creditors that he and SAA had adequately addressed certain issues about the offer raised by Gordhan, the shareholder representative Department of Public Enterprises (DPE), and the National Treasury. Accordingly, on January 19, 2023, Sono wrote to the Minister, informing him that he had been given "more than sufficient information" to take a decision. Nevertheless, "out of an abundance of caution", Sono said he once again addressed the issues raised. He also informed Gordhan that his "constant invocation of the extension provision was an abuse of process aimed at frustrating the conclusion of the transaction". Sono demanded that Gordhan take a decision by February 2, 2023.

On January 26, 2023, Gordhan, in a curt letter to Sono, stated he would not make a decision until SAA provided the required answers to issues raised. He also told Sono that he had no right to address him personally about the proposed sale.

This, said Sono, left him with three options: Do nothing and hope that the Minister changed his mind and made a decision before the preferred bidder withdrew from the process; approach the courts for relief; or institute the wind-down process. After taking legal advice, he chose the legal route.

Meanwhile, on February 5, 2023, Sono received notice from South Africa's International Air Services Council (IASC) that Mango's air service licence had been cancelled with immediate effect on February 3, 2023, because no decision was forthcoming on the proposed rescue of the airline. Sono demanded clarity from the IASC, especially as it was aware of the impending legal proceedings. He was also considering Mango's options to appeal the council's decision. Mango's license was already suspended for two years due to the mothballing of the airline, which has been in business rescue since April 16, 2021.

In a scathing criticism of Gordhan, Sono said the Mango business rescue process raised the question of "whether state-owned entities are capable of being rescued under circumstances where the provisions of the Public Finances Management Act (PFMA) enable the executive authority to frustrate a process that the Companies Act requires to be swift and expedient". He said the PFMA-mandated approvals from the Minister in an entity in business rescue "defeats the entire objective of business rescue, where quick decision making is of the essence". "This scheme of arrangement effectively gives power to a shareholder that has effectively abandoned the business and may not even have any risk to protect it in the future," he stated.

In response, SAA countered that Gordhan had supported that ZAR819-million rands (USD45.7 million) be diverted for the rescue of Mango from funds allocated for the bailout of SAA. "SAA has voted along with all the Mango creditors that this rescue should entail the sale of shares to an investor with the capability to restart the airline. SAA has nothing to benefit from a liquidated Mango. In addition to the funds mentioned above, if Mango is wound down, SAA is liable for the ZAR80-million (USD4.4 million) guarantee issued in favour of the Air Services Licensing Council for passenger protection liability."

Meanwhile, the government's delayed finalisation of and intransigence on the 51% sale of SAA to the Takatso Consortium has also sparked strong criticism of Gordhan, who has been accused by the opposition Democratic Alliance of "showing parliament the middle finger" by refusing to disclose the details of the transaction still undergoing the scrutiny of relevant regulators.