Comair customers could wait years for reimbursement – ​​and might get nothing back: legal expert

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Customers who bought tickets for Kulula or British Airways flights could wait three years to get their money back, and that may not be all, says Vincent Manko, director of business rescue at law firm Cliffe Dekker Hofmeyr.

National operator Kulula.com and British Airways was placed in provisional liquidation earlier this month, leading to a hierarchy of creditors who need to be paid, Manko said.

Talk to SAfm, he warned that despite some banks refunding customers, those who do not have access to these services would be paid last. Noteholders in Comair’s liquidation process are competing creditors.

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He added that Comair’s liquidation process could take up to two to three years at a minimum due to the size of the business. Customers will then have to wait approximately three to four years for a refund, and there is no guarantee that it will be in full.

Manko said customers can go to court for redress if they feel they have been unfairly “duped” after Comair sold tickets before the grounding of flights.

Regarding Comair’s deal with British Airways, there will be an election among expert liquidators on whether they will terminate the deal. Manko said the agreement with the parent company would likely end when Comair begins to be liquidated.

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When the provisional liquidation order was issued, all agreements entered into by Comair, such as employment contracts, were automatically terminated. He added that there is unlikely to be any negative impact on British Airways other than reputational damage.

Classification of creditors

According to a Bowmans law firm reportthere is a classification of creditors in which they are paid from the most important to the least important, namely:

  • Secured creditors: who hold security over their receivables and are ranked and paid first out of the proceeds of the sale of the goods by the liquidating company.
  • Preferred creditors: creditors who do not hold specific security for their claims but who rank higher than competing creditors.
  • Competing creditors: creditors who are paid last from the proceeds of unencumbered assets remaining after the preferred creditors have been paid in full.
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