Cape Town – The South African Post Office (SAPO) has been placed under business rescue, making it the fourth state-owned entity in the country to undergo this process.
The decision comes after the Post Office failed to pay its creditors and was placed in provisional liquidation earlier this year, reports said on Monday.
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.
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.
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Compiled by Betha Madhomu
