Airline 1Time Holdings has filed for business rescue, Business Day reported on Wednesday.
The airline's board said it required business rescue because it was "financially distressed".
The firm had about R320-million in short-term debt and had been in negotiations with creditors since March.
1Time chief executive Blacky Komani told the paper that the airline would continue scheduled services.
The firm had been carrying the debt for two years. "It is money that we owe for services and for some operational costs. We [the new management] inherited it," Komani was quoted as saying.
1Time's shares have fallen 91% over the past two years, from about 155c a share to close at 14c a share on Tuesday.
In April, the company reported a R157-million loss.
"What we need is time to present a turnaround strategy for the business, which will be sold to creditors and investors," Mr Komani told Business Day.
"Business rescue gives you protection from creditors that may want to file for liquidation while you are turning the business around."
The low-cost airline was in the news this week following a second engine failure on one of its planes.
Earlier this year, another low-cost airline, Velvet Sky, went into liquidation after failing to convince a court that it was a candidate for business rescue. – Additional reporting by Sapa