The administrators of insolvent Bonza (Sunshine Coast) have secured a two-month extension of their appointment as voluntary administrators of the airline. Australia's Federal Court granted the extension in a May 27 hearing. Hall Chadwick said it needed the extra time to sell the business and its assets, which it claims is in the best interests of all creditors.
The administrators also said that its US-based owners, 777 Partners, had advised that they may wish to propose a deed of company arrangement (DOCA) to restructure Bonza and its Australian holding company, 777 Holdco, as a group. However, James Hutton, appearing for Hall Chadwick, told the court they had not received a firm DOCA proposal from 777 Partners (or any other potential buyer).
Bonza abruptly ceased operations in late April after 777 Partners stopped sending money to pay aircraft leases (and other operating expenses), triggering lease defaults. This situation arose because 777 Partners' primary financier, Advantage Capital Holdings LLC (A-Cap), decided to turn off the cash tap.
777 Partners has not issued a comment or statement on Bonza's collapse and its role in it. However, any restructuring by them would be minus 777 co-founders and managing directors Josh Wander and Steven Pasko, who have stepped down from the board and their managerial roles after restructuring advisors B Riley Advisory Services were called in earlier this month. B Riley MD Mark Shapiro has taken on the role of interim CEO.
In addition to 777 Partners, Hall Chadwick says several other interested parties have accessed a data room to conduct their due diligence with a view to providing binding offers. However, four of five aircraft leased by Bonza have been ferried out of Australia, and the administrators acknowledge that Bonza’s most valuable asset is its air operators certificate (AOC), which the Civil Aviation Safety Authority may cancel should the airline be liquidated.
"The Administrators note that the AOC is not capable of being transferred to another entity and can only be used by the party granted the certificate," the Hall Chadwick statement reads. "Accordingly, we understand that the only way the AOC can be acquired by an interested party is if they were to acquire the shares in Bonza via a deed of company arrangement."
Among other creditors, Bonza owes 777 Partners approximately AUD76 million Australian dollars (USD50.5 million), with it funding Bonza's loss-making operations since its first flights in early 2023. In addition to its role in the Bonza collapse, 777 had made news recently for selling most of its stake in Flair Airlines (F8, Kelowna), its botched takeover of Everton Football Club, and a lawsuit launched by UK asset management company Leadenhall Capital Partners, which accused Wander and Pasko of "operating a giant shell game at best, and an outright ponzi scheme at worst."
A creditors' meeting to vote on proposals to buy Bonza will now take place on August 5, 2024, instead of June 4.