[Peetwo]

Soar aviation update - 17/02/21:

Via the Oz:

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Soar Aviation fails to find buyer, administrators says school may have been troubled for a year



Soar Aviation CEO Neel Khokhani and Alex Kingsford Smith. Picture: Aaron Francis

• DAVID ROSS
  
  
• JOURNALIST
  
  
  
• 5:36PM FEBRUARY 16, 2021
  

Australia’s largest flight school, Soar Aviation, will be liquidated after company administrators failed to find a buyer, but administrators have alleged the business may have been trading while insolvent for almost a year.

The flight school shut its doors in December laying off all but seven of its 54 staff and leaving hundreds of students in the lurch.

But the liquidators report filed with ASIC alleges the flight school may have been trading while insolvent as far back as January 2020 and kept on life support by payments from its private equity buyers, The Growth Fund, which took over the company in 2018.


“Our preliminary view is that the group was insolvent from as early as January 2020 to the date when the Growth Fund withdrew financial support of the group, being 24 December 2020,” the report said.


However, a report addendum noted it was “the firm view of the directors that the first date on
which the Soar Group could be considered insolvent is 24 December 2020.

“On 24 December 2020 the shareholders indicated that they were not going to provide any further funding,” the report addendum author Brendan Richards said.


Soar Aviation, once a media darling, was scuttled after a string of scandals and legal action hammered the business.

The KPMG liquidators report shows the group slumped to a $1.8m loss in 2019, continuing to generate a $2.8m loss in the 2020 financial year and $2m in 2021 financial year.

The administrators found Soar Aviation incurred trading losses throughout this period “primarily due to a reduction in student activity and expenses incurred in response to the Gordon Legal lead class action”.

The flight school had been troubled for years and money appears to have haemorrhaged out of the business.


Lukesh Kumar (right) with fellow student pilots Felix, Axel & Mizanur outside Soar Aviations base at Moorabbin Airport. Picture: Stuart McEvoy.

The report said the group’s revenue from its courses declined by 41 per cent after the 219 financial year.

The administrators have identified transactions totalling up to $387,863 for further investigation.
They also noted a $2.6m transaction to Soar Aviation’s former director Neel Khokhani which took place around the time the business was acquired by The Growth Fund.

The buyout of Soar Aviation was paid for in $28.98m in cash, as well as the issue of 14.49m ordinary shares and $14.93 preference shares, as well as external debts of $4.52m.

Mr Kkokhani, through a trust, retained ownership of 50 per cent of the company.

However, the report notes the trust “has not submitted a proof of debt”.

The culmination of the collapse of Soar Aviation is a rough landing for its former CEO Neel Khokhani.

Mr Khokhani left the school in February 2020, who said at the time of his departure that it was unrelated to the regulatory and legal issues currently facing the flight school.

Mr Khokhani declined to comment.

Founded in 2013, Soar Aviation had operations at Melbourne’s Moorabbin airport and Sydney’s Bankstown Airport.

At its peak in 2018 the school had 600 students across its sites.

The flight school was used by Victoria’s Box Hill Institute to deliver training services for a diploma in aviation.

The group’s aircraft were involved in three separate accidents, including a fatal incident in November 2020.

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MTF...P2