Cape Town – Communications and Digital Technologies Acting Minister, Enoch Godongwana, has welcomed a high court decision to place the South African Post Office (SAPO) under supervision and in business rescue.
The Gauteng Division of the High Court of South Africa placed SAPO under business rescue on Monday, making it the fourth state-owned entity in the country to undergo this process.
The decision came after the Post Office failed to pay its creditors and was placed in provisional liquidation earlier this year.
Business rescue involves the appointment of a practitioner who temporarily supervises the company and develops a plan to rehabilitate it, aiming to ensure its solvency and provide better returns for creditors compared to liquidation.
According to The Citizen, the joint provisional liquidators accepted the business rescue decision despite believing it was not a viable option due to the Post Office’s longstanding insolvency.
The Post Office’s affairs are said to be in disarray, with a reported debt of R9.4 billion and concerns raised by the auditor general.
ALSO READ | Post office enters business rescue amid financial crisis
The Municipal Employees Pension Fund, one of the Post Office’s largest creditors, supported the business rescue application, the report said.
Judge Van Der Schyff said placing the state-owned utility in business rescue would allow the government to inject the much-needed R2.4 billion in funding it has committed to providing, News24 reported.
“It is gleaned from the minister’s papers, and no objective reason exists to doubt the correctness of the evidence provided under oath, that Cabinet has not only pledged to provide SAPO with the initially earmarked R2.4 billion, but also indicated its intention to support SAPO’s application for an additional R3.8 billion in the October budget,” the report quoted the judge as saying.
She said that the business rescue proceedings were to commence with immediate effect.
Anooshkumar Rooplal and Juanito Martin Damons have been appointed as joint interim business rescue practitioners, pending approval by the Registrar of Financial Services and ratification by SAPO’s creditors.
The decision will give SAPO the opportunity to restructure its operations and implement a turnaround plan to become a solvent and viable business with diverse revenue streams.
“The challenge is on SAPO, the department and all stakeholders to live up to the commitments made in the application,” said Godongwana.
Follow African Insider on Facebook, Twitter and Instagram
Picture: Twitter/@mmodiba10
For more African news, visit Africaninsider.com
Compiled by Betha Madhomu
