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Edcon creditors’ bid to halt restructuring meeting rejected by court – Reuters

PUBLISHED: Mon, 22 Jun 2020 21:25:39 GMT


Reuters

JOHANNESBURG (Reuters) – A court application brought by a group of creditors of South African retailer Edcon to stop the adoption of a proposed restructuring plan for the company has been rejected by the court as non-admissible, the administrators said on Monday.

The decision paves the way for the administrators to finalise the sales process for Edcon by the end of June to allow time for supplier negotiations to be concluded and for summer stock to be purchased.

The planned Monday afternoon meeting to consider the plan is going ahead according to schedule, the administrators said in a notice to affected parties. The meeting is still in session.

Edcon, which owns department store chain Edgars and budget retailer Jet, entered a form of bankruptcy protection in April after sales were hit after the coronavirus lockdown.

Edcon, which opened its first Edgars store in Johannesburg in 1929, had already been struggling due to falling local demand and slow economic growth in South Africa.

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Administrators in charge of Edcon are proposing a sale of parts or all of the company and about 15 parties have shown interest in the sale.

The creditor group – Durban-based Kingsgate Clothing and Clematis Trading – filed the application with a high court in Pretoria on Friday, documents on Edcon’s administrators’ website showed.

In the application, the creditors said Kingsgate and its associate companies were owed 24 million rand, and Clematis about 18.5 million rand.

Kingsgate CEO Yusuf Vahed said in the application that between May 18 and June 8, when the restructuring plan was published, Clematis CEO was advised by Edcon that they could anticipate a potential liquidation dividend of about 50 cents for every one rand owed if the rescue plan was adopted.

Vahed said this would mean Kingsgate and its associated companies, would recover only about 960,000 rand, and if this was the case, it would be keen to convert its debt into equity.

The total amount owed to Edcon’s creditors is approximately 8.1 billion rand ($466 million), the documents published on the administrator’s website said.

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