Retailer Drip Footwear has entered liquidation, with employees laid off this week.
Drip Footwear was established in 2019 and sold its own line of sneakers across various retail centres across the country,
However, the company struggled to pay R20 million for advertising services, and the High Court in Johannesburg ordered that it be liquidated at the beginning of September.
The order affected 14 stores across various malls in the country.
As reported by the Citizen, the company’s workers were laid off this week after a series of unstable salary payments.
Attempts have been made to save the company, with senior political figures and regulators also involved.
In August, Business Day reported that the South African Reserve Bank (SARB) seized $200,000 (R3.5 million) of Drip’s funds after failing to adhere to South Africa’s exchange control regulations.
Gauteng MEC for Finance and Economic Development Lebogang Maile then asked the SARB not to liquidate the company, arguing that it employs hundreds of people, many of them from historically disadvantaged groups, including women and youth.
Not the first
Drip Footwear joins a growing list of over 1,000 South African companies that have been liquidated since the start of 2024.
Stats SA’s latest data showed that the total number of liquidations decreased by 9.9% in August 2024 compared with August 2023, declining from 142 to 128 year on year.
Voluntary liquidations decreased by 11 cases to 117, and compulsory liquidations decreased by 3 to 11 during August.
The number of liquidations decreased by 6.8% from 410 to 382 in the three months ended August 2024, compared with the same period in 2023.
Since the start of the year, 1,020 businesses have shut down in 2024.
Although this is a 5.9% decrease from the 1,084 liquidations seen in 2023, it is still a high number. The trendline is, however, declining, even compared to pre-COVID-19.
Several well-known companies are also facing challenges across South Africa.
Drip’s competitor, Cross Trainer, entered business rescue in August this year after facing cash-flow problems from the COVID-19 pandemic and struggling to keep up with operational costs.
Retailer West Pack also sought business rescue in May. The company said that it was financially distressed and unlikely to pay its debts when they became due over the next six months.
SPAR could offer West Pack a lifeline, with a potential acquisition on the cards.
South Africa’s largest privately owned automotive parts retailer and wholesaler, AutoZone, may also receive a lifeline. JSE-listed investment group Metair is reportedly interested in acquiring AutoZone for R290 million.
Autozone entered business rescue in July of this year after performance did not meet expectations following a private equity transaction funded by debt.
Yeast City Housing, a Tshwane-based non-profit social housing company, is the latest company placed under business rescue after struggling to service a debt of R130 million, including interest.
Although some businesses survive business rescue, others are not as lucky,
In recent months, solar company Hohm Energy and JSE-listed Ellies Holdings began liquidating after their respective business rescue proceedings could not save the respective companies.