Sapo to be placed in business rescue
The Gauteng High Court (Pretoria) has granted the government's application to place the SA Post Office (Sapo) in business rescue, putting a halt to ongoing liquidation proceedings and paving the way for a R2.4bn taxpayer bailout, reports Fin24.
Sapo was placed in provisional liquidation in February due to its failure to pay rent and other liabilities, but its provisional liquidators did not oppose the application.
The judgment, delivered by Judge Elmarie van der Schyff yesterday, following an urgent hearing in Pretoria, confirmed the appointment of Anoosh Rooplal and Juanito Damons as joint interim rescue practitioners.
Their appointment must be ratified by a meeting of the majority of Sapo's creditors.
Van Der Schyff said placing the state-owned utility in business rescue would allow the government to inject the much-needed R2.4bn in funding it has committed to providing.
Sapo’s provisional liquidation came after a case brought by property company Withinshaw. It also owes hundreds of millions of rands in unpaid salaries to its staff, retirement and medical funds, SARS, landlords, and other suppliers.
To return Sapo into an operational state and solvency, the Minister's plan approved by Cabinet and filed as part of the court application, seeks to reduce about R1.33bn in employee costs.
This would cut 7 000 jobs in Sapo, leaving just under 5 000 employed by the postal services company. Sapo's current workforce is just under 12 000 employees.
‘The harsh reality is that the facts point to it that Sapo's workforce needs to be extensively curtailed for Sapo to survive, but business rescue proceedings are prone to have a less severe impact on the workforce than final liquidation,’ wrote Van Der Schyff.
However, this remedy will be robustly opposed by the trade unions that represent employees at Sapo.
The Democratic Postal and Communications Union, which was represented in the court proceedings, said it would resist any attempt to cut jobs at the utility.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.