Creditors Kingsgate and Clematis had owed R24 million and R18.5 million respectively by Edcon and approached the court with an urgent application against the retail company’s business rescue practitioners (BRPs) on Friday.
The BRPs are set to meet to discuss Edcon’s business rescue plan on Monday afternoon at 2pm.
The creditors’ interdict had argued that it sought more time to consider Edcon’s business rescue plans as it would see them walk away with only 4c for every rand despite the anticipated dividends being initially around 50c.
This means that the R24 million owed to Kingsgate would end up being approximately R960,000.
In response to the interdict, the BRPs, Piers Marsden and Lance Shapiro, said the ailing retailer “does not have the luxury of time”.
In papers filed on Sunday, Shapiro pointed out that the plans were published on 8 June and so, in terms of Companies Act, the meeting had to take place within 10 business days thereof and added that any proposal to rescue Edcon would have to be implemented “without delay”.
Shapiro said there was a “very small window period” for the sales of the businesses to be concluded.
“If no offers are received or the businesses are not sold in July 2020, then all affected persons will be prejudiced with less value being received and tens of thousands of employees facing the risk of retrenchment.”
He further said the meeting had to go ahead and that Kingsgate and Clematis would have the opportunity to make motions to amend and adjourn it during proceedings.
However, he said, their claims comprised less than 0.6% of Edcon’s creditors’ voting interests and there was “overwhelming support for the adoption of the business rescue plan”.
Last week, Edcon announced that be releasing approximately 22,000 of its employees after serving them with retrenchment notices on 11 June amid its business rescue process.
The retail company, which operates Edgars, Jet and CNA, and runs the Thank U programme, placed itself under voluntary business rescue due to a massive R2-billion economic fallout from the Covid-19 lockdown.
The list of Edcon’s secured creditors, published as part of the business rescue plan, revealed that a total of R3.7 billion was owed by the company to more than 80 entities.
The list of unsecured creditors is likely far larger (running into many more billions), but these businesses are either fourth or last in the queue, depending on their status.