June 22, 2020 / 10:15 AM / 22 days ago

Majority of Edcon creditors approve rescue plan

JOHANNESBURG (Reuters) - South Africa’s Edcon on Monday said that more that 75% of its creditors have approved a proposed rescue plan that will see the retailer sold in parts or whole after it entered a form of bankruptcy protection in April.

The approval paves the way for the administrators to finalise the sale process by the end of June to allow time for supplier negotiations and for summer stock to be purchased.

About 15 parties have shown interest in the sale, with the selection of the offer expected in early July. Edcon entered business rescue after sales were hit by the COVID-19 pandemic.

Creditors voted during a virtual meeting that started on Monday afternoon.

“We will now proceed with implementing the adopted Business Rescue Plan, keeping all stakeholders updated as the plan progresses,” the business rescue practitioners, Piers Marsden and Lance Schapiro of Matuson Associates, said.

The business rescue plan proposes an accelerated sale of Edcon’s divisions, which include budget retailer Jet and department store chain operator Edgars and the closure of stores or brands that remain unsold.

The administrators have already served retrenchment notices to 22,000 workers of Edcon, which employs 17,292 permanent employees and about 5,000 seasonal casual workers.

The retailer, which opened its first Edgars store in Johannesburg in 1929, had already been struggling due to falling demand and slow economic growth in South Africa.

Earlier on Monday, an application brought by a group of Edcon creditors to stop the adoption of the proposed restructuring plan was rejected by a court as non-admissible, according to the administrators.

The creditor group - Durban-based Kingsgate Clothing and Clematis Trading - filed the application with a high court in Pretoria on Friday, documents on Edcon’s administrators’ website showed.

In the application, the creditors said Kingsgate and its associate companies were owed 24 million rand ($1.39 million), and Clematis about 18.5 million rand.

The total amount owed to Edcon’s creditors is about 8.1 billion rand.

Reporting by Nqobile Dludla; Additional reporting by Shubham Kalia in Bengaluru; Editing by Jane Merriman, David Evans and Maju Samuel

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