The contentious plan to try and sell Edcon off in divisions put forth by business rescue practitioners (BRPs) tasked with plotting a way forward for the ailing retailer, was given the green light at a meeting of the creditors on Monday night.
This after an eleventh hour court bid on the part of two concurrent creditors to postpone the meeting was unsuccessful, with the North Gauteng High Court on Monday morning striking the urgent application brought by Kingsgate Clothing and Clematis Trading from the roll.
Kingsgate and Clematis – which are owed a combined total of R42.5 million by Edcon – approached the court late on Friday afternoon asking for more time as well as for additional information and documents, in order to better consider the plan Piers Marsden and Lance Shapiro put together before voting on it.
In their papers, Kingsgate chief executive officer Yusuf Vahed said they had been under the impression they would be walking away with 50c for every Rand they were owed but that in terms of the now adopted plan, this amount had dropped to 4c.
But in their papers, Shapiro for the BRPs said any proposal to rescue Edcon would have to be implemented “without delay” as there was a “very small window period” for the sales of the businesses to be concluded”.
In a statement after court and ahead of the vote yesterday, Kingsgate said the judge had ruled it and Clematis must raise their complaints at the meeting.
“The court was of the view that if the applicants did not obtain satisfaction at the meetings, it was open to them to approach the court again on an urgent basis,” the company said. It also said that should the vote succeed – which it did – it would “have to consider bringing proceedings to set aside the outcome of the meeting.”
At the meeting, Marsden was asked about the odds of the concurrent creditors ultimately recovering 100% of the monies owed to them and said this was “very, very unlikely”.
He said, however, that the latest forecasted returns were at least 6c on the Rand in the event of a winding down, and that the BRPs were hopeful of a “marginally better result” if the company was sold.
Asked about what parties had expressed interest in purchasing Edcon and/or any of its divisions, Marsden replied that the BRPs were not in a position to disclose as much at this stage. He said they had entered into non-disclosure agreements.
“Our view is also that this could substantially diminish the prospect of concluding a deal to the extent that that compromises or contaminates the process,” he added.
In court, Vahed raised questions around moves by Marsden and Shapiro to increase their fees from R2 000 an hour – as stipulated in the Companies Act – to R4 500 an hour “without setting out any motivation other than to say Edcon is a large company”.
Marsden also addressed this at yesterday’s meeting, pointing to “the complexity and size of this engagement” as well as “the various risks that one assumes as the principal officer of a company.”
“If you had to contextualise that with the going rate of any audit partner or any legal professional, I think you would find that R4500 is certainly a reasonable rate,” he said.