Death by neglect: How Pretoria killed two business rescues

Two business rescue processes involving the Post Office and sugar producer Tongaat Hulett have either collapsed or are on the brink of collapse, putting tens of thousands of jobs at risk, posing a tricky question: who is to blame?

Even though they are very different cases and both have very different causes, according to business rescue experts the root problem in both cases doesn’t lie in legislative shortcomings, the specific business plans proposed (though there are problems with those too) or even the business environment (though that’s also a big problem). The biggest single problem has been chronic government passivity, inactivity and neglect.

The business rescue process is designed to ensure that all interested parties reach a compromise that results in the best possible outcome in the context of business failure, even though that outcome might be painful for debtors, shareholders and employees.

Yet, after three years of haggling, in neither case has a solution – even a bad one – prevailed, and both companies now seem likely to move to the more devastating option: liquidation.

Of the two, technically speaking, the South African Post Office (SAPO) could still escape outright liquidation and there’s been no formal court application seeking to declare that the business rescue process has expired. According to the January 31 Business Rescue Report by the business rescue practitioners (BRPs), they are “reassessing” whether to implement a business rescue termination application and to further evaluate the future viability of SAPO.

The cause is a devastating communication from the ministry of communications late last year, which indicated the government would not provide a second funding tranche of R3.8bn to implement the business rescue plan.

On the brink of rescue, until …

SAPO was placed into business rescue in July 2023, with Anoosh Rooplal and Juanito Damons appointed as joint BRPs. Creditors adopted SAPO’s business rescue plan in December 2023, which involved a major restructuring and job cuts, and was framed around a government funding commitment.

This constitutes a shocking surprise for the BRPs, because this time last year, they reported to the parliamentary communications committee that, after a major retrenchment exercise, the Post Office’s position had stabilised. In the process, about 4,875 employees were dismissed from a total staff of about 11,000, and 366 branches were closed, leaving 657 operating. At this point, the business rescue process was expected to exit in just a few months.

The plan was always premised on a huge financial bailout of the Post Office. Apparently, the financial position of the state-run institution has declined further, though exactly how bad it has become is not known.

Asked about the current financial state of the Post Office, the BRPs say: “Without the second tranche of shareholder funding, SAPO remains cash constrained. While cost reductions and liability restructuring have materially reduced the deficit position, the entity does not yet have sufficient internal cash generation to fund large-scale capital reinvestment.”

Critics of the business rescue plan point out that simply demanding that the state bail out the Post Office does not constitute a path towards a comprehensive business turnaround in any sophisticated sense. South Africa has seen dozens of state-owned enterprises repeatedly receiving “bailouts” with no real change in their on-the-ground approach; plus, the entity has already received the first tranche of R2.4bn for business rescue.

The business rescue process has already cost about R250m, with the BRPs earning about R8m in fees, and the vast majority of the remainder spent on a large team of consultants, mainly auditors and corporate advisers.

Death by bureaucracy

The BRPs are looking at partnership proposals, and over 100 proposals had been received from various South African corporates late last year, which are in the process of being evaluated, the BRPs have said. Yet this is very late in the day to start examining partnership proposals, and it’s unclear whether any of them are financially realistic.

But the big problem for the BRPs has been the inordinate delays in government processing of fairly simple components, such as confirming board membership. SAPO’s board of directors was dissolved in May 2023, and once the company entered business rescue, communications minister Solly Malatsi invited public nominations for non-executive board members in early 2025. But they are only likely to be finalised by March 31.

In response to questions from Currency, the BRPs say their exit is not solely within their discretion. “A sustainable exit depends on the shareholder appointing suitably qualified executives and governance structures to continue implementing the turnaround strategy and to ensure the long-term viability of the entity. Currently, SAPO does not have a board of directors or a permanent CEO, CFO and COO,” they say.

“In the case of a state-owned company with a public mandate, the transition from rescue to ordinary governance must be responsibly managed to avoid destabilising the restructuring gains achieved during the process. Complex restructurings, particularly those involving funding negotiations, stabilisation of operations, labour restructuring and state participation, inevitably extend beyond the initial statutory guideline outlined in the Companies Act 71 of 2008.”

Thousands of jobs at risk

The situation for Tongaat Hulett is, in some ways, much simpler, even though the consequences of business rescue are much more serious, potentially involving tens of thousands of livelihoods.

Tongaat entered business rescue in October 2022, after major historic accounting irregularities and governance failures left it financially broken. Creditors adopted an amended business rescue plan in January 2024, which was essentially a debt-to-equity solution proposed by the Vision Group, which had acquired the lender claims by May 2025.

But in February 2026, the BRPs applied to the court for provisional liquidation, stating that there was no longer a reasonable prospect of implementing the adopted plan/completing the deal. The application was set down for February 27. Vision and Tongaat’s other strategic partner, the Industrial Development Corporation, were unable to agree on the funding and refinancing arrangements needed to complete the transaction within the agreed timelines. Vision Group member Robert Gumede said it was “most unfortunate” that the Vision business rescue plan had been allowed to fail.

But apparently, the real issue behind the failure was the December 2025 Supreme Court of Appeal ruling that Tongaat Hulett could not suspend statutory sugar industry levies during business rescue, which at the time amounted to more than R1bn. The BRPs were in the process of appealing this judgment, but could not do so in time.

Since this was a statutory provision, quick action by the government could have remedied the situation, but no co-operation was forthcoming, illustrating that without prompt, attentive and clear government action, the position of the BRPs can sometimes be extremely complicated.

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