Edcon’s business rescue plan, which will see the embattled owner of clothing retail chains Edgars and Jet being sold off in divisions, has been approved by “the majority of affected parties including, employees, creditors, lenders and landlords”.
This was confirmed by Edcon’s business rescue practitioners (BRPs), Piers Marsden and Lance Schapiro on Monday night, following a marathon meeting with the group’s creditors.
The approval of the plan, which has the backing of labour union SACCAWU, came despite an eleventh-hour court bid earlier on Monday by two of Edcon’s creditors, Kingsgate Clothing and Clematis, to stop the plan from being approved.
“The business rescue plan was supported by the holders of more than 75% of the creditors’ voting interests that were voted, which included at least 50% of the independent creditors’ voting interests,” Marsden and Schapiro said in a statement, adding that a notice with details relating to the result of the vote will be sent to all affected persons.
“Both the employee and SACCAWU representatives expressed support for the business rescue plan … as it will ensure the preservation of jobs, ensuring future business continuity and ultimately support for the South African economy. The representatives indicated that liquidation is not a consideration and the rejection of the plan in this current economic and unemployment context would have a detrimental impact on all stakeholders,” the BRPs noted.
Edcon’s business rescue plan, which proposes an ‘accelerated sales process’, was published on June 8.
“The sales process is progressing well, with interested parties currently completing their due diligence, with binding offers set to be received by end of June 2020. The plan will not only offer greater gains to employees and creditors but would ultimately serve to contribute to the greater economy,” the BRPs said, noting that the “protection and balancing of the interests of all stakeholders” remains a priority.
“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 BRPs added.
Marsden and Schapiro pointed out that the approval of the plan represents “the start of a complicated and rigorous process that comes with risks and challenges that need to be considered”.
These include “the execution of the final sales agreements; uncertain and deteriorating market conditions; as well as any unforeseen business rescue or liquidation related challenges”, among other things.
“We will continue to work tirelessly to achieve the objectives of the business rescue plan, and we will now proceed with implementing the adopted plan, keeping all stakeholders updated as the plan progresses,” the BRPs.