Creditors of Bonza (Sunshine Coast) have voted to liquidate the airline at a meeting in Sydney on July 2, 2024. This followed the release of a scathing report by the administrators, Hall Chadwick, last week, who suggested the low-cost carrier may have traded while insolvent and that creditors may walk away with nothing after Bonza accrued losses exceeding AUD133 million Australian dollars (USD88.5 million) since its foundation in September 2021. At the meeting, 35 creditors voted to liquidate the airline, while six voted against doing so.
Bonza ceased flying in late April 2024 after the lessors issued default notices and repossessed the carrier's five aircraft. The airline only began scheduled operations in February 2024. In their report, Hall Chadwick say Bonza may have had significant solvency and operational concerns from November 30, 2023, and may have been insolvent from March 1, 2024, through to the date of administration. Directors of Australian companies that continue to trade while insolvent are subject to a range of civil and criminal sanctions.
The final creditors' report outlines a series of strategic errors made by Bonza's management and primary shareholder, 777 Partners. The latter entity kept the airline afloat, albeit on an erratic and unreliable basis, and supplied it with aircraft on similar terms, ultimately proving both beneficial and parasitic to Bonza. The administrators determined there were four reasons for Bonza's failure, including (i) ongoing trading losses, (ii) strategic management failures, (iii) strains on existing cash flow, (iv) and inadequate financial modelling.
"The administrators ran an extensive sales campaign involving numerous investors, other airlines and companies from the travel industry," reads a statement from Hall Chadwick following the final creditors meeting. "Unfortunately, the administrators had not received any offers for the sale of the company business and/or assets at the conclusion of the campaign."
The decision to liquidate Bonza opens the way for its 323 employees to apply for payment of unpaid salaries via the Australian government's Fair Entitlements Guarantee, a scheme of last resort that provides financial assistance for unpaid employee entitlements in instances of insolvency. Most employees have not been paid since March, with the airline going into administration just days before the April payroll was due to be processed.
The administrators are yet to determine the payments to creditors following the liquidation process, but initial indications suggest no payments may ever be forthcoming. Creditors, including the employees, have submitted claims of approximately AUD165 million (USD110 million), while Bonza has almost no worthwhile assets aside from a small amount of cash held in bank accounts.
