Financial Mail reports that Edcon, until recently SA’s largest clothing retailer, is filing for business rescue to allow it to continue trading.
Typically, putting a company into business rescue allows it to continue trading while its affairs are restructured to avoid liquidation. On Wednesday, Edcon confirmed that its board had passed a resolution authorising it to file for business rescue. It advised that between 15 March and 29 April, it had lost R2bn in sales and had problems collecting what was owed from customers. “Edcon is unable to pay its suppliers for both the March and April month-ends. Paying April salaries will require assistance from the Unemployment Insurance Fund’s (Covid-19 assistance) program. Edcon also anticipates that the sales will be depressed for some time during the ‘Covid-19 risk-adjusted strategy’ phase, which may last several months,” the retailer said. A year ago, Edcon got a lifeline when the Public Investment Corporation, landlords and creditors funded a R2.7bn recapitalisation deal that enabled it to keep operating, in exchange for a stake in the company. It was part of a plan by various stakeholders, including union federation Cosatu, to keep the company afloat and prevent the loss of 140,000 direct and indirect jobs.
- Read the full original of the report in the above regard by Adele Shevel at BusinessLive
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