Creditors have approved a Business Rescue Plan for Edcon to help finalise the sale of the retailer. This comes after the retail giant entered voluntary business rescue in April after years of severe business strain.
In a statement, Edcon announced that the approved Business Rescue Plan is focused on “an ‘accelerated sales process’, with its key priority being to secure the sale of the divisions/business or parts of the business with the intention of saving jobs”.
The sales process is reportedly progressing well, and interested parties are expected to make binding offers by the end of June 2020.
Edcon reports that the plan is supported by the majority of affected parties including employees, creditors, lenders, landlords, with support for the plan received from South African Commercial, Catering and Allied Workers Union (SACCAWU) and Employee’s Committee.
“The plan will not only offer greater gains to employees and creditors but would ultimately serve to contribute to the greater economy, the priority remains for us, the protection and balancing of the interests of all stakeholders,” commented the practitioners. “Not only will jobs be saved, employees will receive better severance, in the likelihood of some employees being retrenched. Creditors and landlords will also be in a better position as they will not only receive better dividends but the sale will also provide them with sustainable customers to ensure continued trading.”
The Practitioners added that, “the approval of the plan is the start of a complicated and rigorous process that comes with risks and challenges that need to be considered, including and not limited to the execution of the final sales agreements, uncertain and deteriorating market conditions, as well as any unforeseen business rescue or liquidation related challenges”.
Fin24 reports that Edcon owes uppliers Kingsgate Clothing and Clematis Trading R24 million and R18.5 million respectively.
On June 10, roughly 22 000 employees were issued notices of retrenchment in a further attempt to avoid liquidation.
Read the full Edcon statement here: media-release-brp-voting-process-22-june-2020
Picture: Facebook / Edgars