“SALE, SALE, SALE” – one article remarked. It was announced earlier this year that Stuttafords would be closing its doors after it had amassed a debt of R836m which it was unable to recover. The 159-year-old retailer would be liquidated after the major shareholders of the company refused to inject any further money into the haemorrhaging business. Despite an initial business rescue plan and a subsequent amended one voted on by the creditors of the company, it was eventually concluded that there was no rescuing the retail giant.
As consumers drooled at the prospect of getting the best deals prior to the final shut down on 1 August 2017, one lingering bystander remained, the employee. Those with secured claims would be first in line to get their money back. One of the biggest, being Nedbank as reported by Moneyweb stood to recover approximately R120 million.
Despite the fact that employees hold preferent claims, it was reported by Moneyweb that Stuttafords employees would be paid a capped R12 000 as part of their severance pay in addition to leave pay of R4 000.
In today’s tough economic climate with jobs in retail slimming by the day, the failure of a big retail giant further underlines that when it goes wrong those at the end of the food chain are always hard hit by the consequences that follow.
Despite the fact that the total number of liquidations are down almost 30% in May year on year and the number of insolvencies fell by almost 23% in April year on year, as reported by Statistics SA, it’s still a distressing trend that employees and their families are always left reeling at the end of it all.
It is time the Courts implemented stricter enforcement of Section 76 and 77 of the Companies Act. Once companies fail, Directors and CEO’s are able to sustain themselves while the poorest of the poor are left to fend for themselves. In conclusion, Stuttafords and other State entities like SAA and SA Airlink should be used as a learning curve for businesses in operation so as to ensure the future of the South African workforce is secured.
