[imagesource:waterfront]

In what has become an all-too-familiar phrase for many a South African business, ‘cash-flow problems stemming from the Covid-19 pandemic’ has forced another one of South Africa’s major retail stores into business rescue.

Unable to keep up with its operational costs, Cross Trainer announced on Wednesday that it has gone into business rescue, affecting 67 stores nationwide.

George Nell from Corporate Business Rescue, Cross Trainer’s business rescue practitioner, confirmed the move this week, saying that “difficult times are ahead”. The group will now begin negotiations with trade unions, but according to BusinessTech, several former employees said they ‘did not know the company was under financial stress or would be retrenching staff.’

“Sometimes the situation is that the procedures just follow one another so quickly that they cannot follow the legitimate procedures, but we will go back and see what uh what happened, and we will rectify what the company did wrong.”

Cross Trainer’s woes are shared with several other major South African companies. AutoZone, West Pack Lifestyle, and Hohm Energy have all been placed under business rescue in South Africa.

Autozone, the largest privately owned automotive parts retailer and wholesaler in South Africa entered business rescue in 2014 due to poor performance and debt servicing costs.

West Pack is considering acquisitions and selling non-core assets to improve its financial position, and Hohm Energy, a solar company, also entered business rescue after cash flow challenges and an inability to service existing debts.

Several major South African companies have found themselves unable to climb out of the debt trap and have been liquidated, such as former JSE-darling Ellies, which recorded a loss of R106.5 million. Data from Stats SA showed that over 750 businesses were closed in the first six months of 2024.

It’s been a long winter of discontent for South African businesses, let’s hope 2025 brings better fortunes.

[source:businesstech]