One of South Africa’s biggest retailers, Edcon, has served 22 000 employees with retrenchment letters as they struggle to find a way out of debt. The company has been in business for 90 years and operates under four principal divisions throughout South Africa.
Edcon sited load shedding and lockdown as the cause of the business collapse in the retrenchment letters. The retail giant was placed in business rescue in March, and has since been seeking interested parties to invest in the franchises in an attempt to stay afloat. No offers have been forthcoming.
On June 10, roughly 22 000 employees were issued notices of retrenchment in a further attempt to avoid liquidation, according to TimesLive.
Employees are rushing to find new sources of income, but the current financial and economic climate prove to be a challenge.
The SA Commercial, Catering and Allied Workers Union (Saccawu) said, the decision to place the company in business rescue was made too soon, despite the company receiving a cash injection from the Public Investment Corporation (PIC) in the recent past.
Appointed Business Rescue Practitioners, Piers Marsden and Lance Schapiro, said in the Business Rescue Update on June 9: “It is clear that it is in the best interests of all stakeholders to proceed with this business rescue plan, which fundamentally seeks to obtain the sale of the Business and, or its Divisions, importantly contributing to job preservation and business continuity. 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.”
No bids have yet been made, but Edcon aims to sell the entire business which could save a number of jobs and livelihoods in the future. Edcon says they will prioritise selling the business and ensure as many jobs as possible are saved.
“The key priority and intention of the sales process is to secure the sale of the Business and/or its Divisions as going concerns, which most notably will involve the transfer of some of the employees, resulting in a significant number of jobs being saved at Edcon,” said the rescue practitioners.