By Hilary Mare
STUTTAFORDS, which was once the paragon of retail, is permanently closing its doors on 1 August.
Two outlets in Gauteng and four in Cape Town have already closed, and they’ll be followed in the next few weeks by all stores in Botswana and the branch situated at Maerua Mall in Windhoek.
The South African headquartered departmental store, once the Harrods of South Africa, has been placed in a business rescue wind-down, after 61 percent of independent creditors, who are owed a total of R836 million, voted in favour of this process, over the liquidation option.
Unless a buyer comes forward, this means assets will be sold and stores closed, in order to realise money for creditors and the business.
Creditors include the retailer’s primary banker Nedbank, as well as brands such as Estee Lauder, Levi Strauss, Tommy Hilfiger and Polo.
“It’s a positive outcome for the staff of the company, and given the circumstances, it provides the best outcome for creditors and other affected parties,” said Stuttafords Chief Executive Officer, Robert Amoils.
“It’s positive that the staff of the company, many of whom have been employed for over 20 years, will be entitled to their full retrenchment packages.”
When Confidente visited the Maerua Mall branch over the weekend, the store looked inadequately stocked, and secrecy surrounded the actual closing date of the store, with staffers refusing to comment.
A staff member, later identified as a departmental manager, and who refused to share her name with Confidente said, “What I can tell you is that people are saying wrong things about our store, but I have no comment. You can call South Africa and find out the real position of this store.”
If the wind-down is completed, the name of the 159-year-old department store will fade into history, and the company, which will essentially be a shell, may still be liquidated.
The entire company will be wound down in the next few months, unless bought by a third party. Various discussions have taken place between interested parties and the company, but no formal offer has been made.
“Over the next few months the remainder of the stores will be closed, subject to any further offer,” Amoils said.
Until this week, products were being supplied to the business on a limited basis. Further procurement of stock is unlikely.
In terms of the wind-down, funds generated will be distributed to the affected parties. They will maintain their claims against the company and should they wish to place the company into liquidation after the wind-down, they might still do so. By that point, though, the company will have no assets.
Stuttafords placed itself in voluntary business rescue on October 28 last year, because it was reasonably likely that it would not be able to settle its financial obligations.
The business rescue plan, which focused on restoring the company to technical solvency, was amended four times, as conflict grew between shareholders, between management and some shareholders and between some creditors and management.
Ellerine Bros, the single largest shareholder, withdrew from its commitment to inject R12 million into the business, in exchange for a 76 percent stake. It currently owns 26.4 percent. Ellerine Bros said that it had lost faith in the management of the company, and did not believe the business could be saved. It said management had not disclosed financial records sufficiently.
Amoils is the financial director of Vestacor, which holds 20.1 percent of the retailer.
In a wind-down, within a business rescue, concurrent creditors get at least 3 cents to the rand, whereas in liquidation they receive zero.
Some creditors, however, believe that Stuttafords should be liquidated, largely to allow for an investigation into what went wrong.
Once the business rescue wind-down is completed, creditors will be able to apply for the liquidation of the company, and further investigate the allegations of reckless trading.
Stuttafords’ closure is not only a problem for its entire staff, but also for the company’s 280 creditors.
Confidente. Lifting the Lid. Copyright © 2015