A group of 10 former Edgars suppliers are applying to the Gauteng High Court (Pretoria) for permission to litigate against Edcon, which is in business rescue, to improve their low payout and get more clarity about why the clothing retailer almost collapsed.

A Business Day report says the business rescue process is not yet complete, even after clothing retailer Edgars was sold to private clothing company Retailability and discount chain Jet was sold to TFG, the owner of Foschini, in 2020.

The 10 suppliers led by clothing manufacturer Kingsgate and its director, Yusuf Vahed, want to be given permission by the High Court to start legal action and, if successful, ask the court to order business rescue practitioners Lance Schapiro and Piers Marsden from Matuson & Associates to provide Edgars’ financial accounts dating back to 2018.

They want to know how long Edgars was trading in financial distress and if it was in breach of the Companies Act by trading in an insolvent position.

Vahed said clothing and product suppliers had not been provided with all the financial statements they requested.

The court action is a last-ditch attempt to improve the payout to creditors such as Vahed.

The suppliers involved in the court action are owed a collective R109m but will get repaid just under R7m, which Vahed called ‘a travesty of justice’.

Secured creditors, such as landlords and banks, will get 19c for every rand owed to them and the clothing and product suppliers only 6c, which was approved when creditors approved the business rescue plan in 2020.

Full Business Day report