By Lehlohonolo Lehana.
Communications and Digital Technologies Minister Mondli Gungubele has raised “serious concern” over reports that the South African Post Office (SAPO) is facing provisional liquidation.
The SOE was placed under provisional liquidation after a successful court application by one of its creditors, a process that might lead to its doors permanently closing after operating for more than 30 years.
A property company called Bay City Trading 457, which leases properties to the SA Post Office, grew tired of the SOE not paying rent and approached the Pretoria High Court to have it provisionally liquidated. It is unclear how much Bay City Trading 457 is owed by the SA Post Office.
On 9 February 2023, the court ruled in Bay City Trading 457’s favour and placed the SA Post Office under provisional liquidation.
Bay City Trading 457 chose the provisional liquidation route instead of a process to rehabilitate the SA Post Office such as businesses rescue (less draconian), indicates that the SOE is arguably beyond redemption. Liquidation usually is the last resort and follows after a failed business rescue process.
A provisional liquidation portends a process of winding up the SA Post Office, which involves its assets being sold, and the proceeds from this sale used to pay liquidation expenses and the SOE’s creditors. It is usually hard for companies to be rehabilitated and resume trading at this juncture.
The high court placed the SA Post Office under provisional and not final liquidation because it wants all affected parties — including the SOE’s management, workers, and creditors — to put forward their reasons why the court should not order the final liquidation of the SOE. This process is set to play out in court on 1 June.
A final liquidation is a worst-case scenario as it will result in the SA Post Office’s operations closing permanently and workers permanently losing their jobs. Final liquidation of the SA Post Office would also be detrimental to SA’s social grant system as the SOE distributes social grants to more than seven million beneficiaries every month.
The Post Office has suffered repeated annual losses, while six thousand jobs are also on the line due to looming retrenchments.
This as the state-owned entity’s debts stand at some R4 billion.
Finance Minister Enoch Godongwana granted the SA Post Office a bailout worth R2.4-billion in the February Budget to recapitalise its balance sheet.
In a statement on Sunday, Gungubele said SAPO remains a crucial government service which caters to millions of citizens and cannot afford to cease its operations.
“The department and SAPO must work diligently to ensure that the Post Office transforms into an independent and profitable business entity for the benefit of the country’s citizens.
“All necessary steps will be taken to ensure continuous provision of social services, timely grant payments, efficient workforce, and harmonious negotiations with SAPO’s creditors towards favourable outcomes.”
The minister has requested that the SAPO board chair and the CEO to provide a detailed briefing on all litigations and debts currently facing the organisation.