‘Liquidation is value destructive’: Post Office seeks to exit business rescue
· Citizen
The South African Post Office (Sapo) is working towards exiting business rescue, with officials signalling a renewed push to stabilise the struggling entity while avoiding liquidation.
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This emerged during a briefing to parliament’s Portfolio Committee on Communications and Digital Technologies on Friday, 27 March, where business rescue practitioners (BRPs) and government outlined ongoing challenges and progress.
Sapo entered business rescue in July 2023 after facing provisional liquidation.
Since then, 366 branches have been permanently shut, leaving 657 still operational, while 4 342 employees were retrenched in April 2024.
Treasury snubs Post Office amid business rescue
Hopes for direct financial relief were dashed when the National Treasury did not allocate R3.8 billion, as requested by the Post Office, in the 2026 budget.
The department of communications and digital technologies has set aside R700 million from its budget for universal service obligations aimed at maintaining postal services in underserved communities.
Communications and Digital Technologies Minister Solly Malatsi told MPs on Friday that the department has discretion over how the funds are used, following engagements with Treasury this week.
However, access to the funding is not immediate due to parliament needing to pass a bill.
“The spanner in the works is that, that funding doesn’t become immediately available because there’s a parliamentary process that is related to the Appropriations Bill,” Malatsi said.
The minister indicated that only a portion of the allocation is likely to be directed to Sapo.
“There is an estimate amount of R350 million.”
Watch the meeting below:
He added that discussions are ongoing to prioritise urgent financial pressures while ensuring the funds are used effectively to avoid liquidation.
“We have to ultimately get to a balanced approach of the use of this R700 million to deal with the majority pressing issues.”
Liquidation threat looms
The BRPs – Anoosh Rooplal and Juanito Damons – warned that legal obligations may force them to act if the financial situation does not improve.
Rooplal told the committee that discussions with government have intensified in recent weeks, particularly around ending the business rescue process through a court application.
He explained that a draft termination application, first submitted in September 2025, has undergone extensive review following engagements with the communications department.
The plan involves filing a notice of substantial implementation, delaying certain creditor payments, and ensuring at least six months of operational cashflow before handing over to a newly appointed Post Office board.
The appointment of the board is now nearing completion, according to Rooplal.
Rooplal, however, stressed that the lack of financial support has placed the entity under severe strain.
“We have been following each budget speech with bated breath hoping for funding and it’s now three budget speeches, of course there is no funding as we are all aware.”
He warned that Sapo is facing an imminent cashflow shortfall, therefore, funding was needed.
Legal constraints
Although liquidation is not the preferred route, the practitioners say they will be legally compelled to consider it if recovery is no longer viable.
“We believe that liquidation is value destructive and of course that’s not our first priority. The BRPs have always acted responsibly,” Rooplal said.
He also highlighted that the approved business rescue plan restricts key recovery options.
The plan binds both creditors and government as shareholder, preventing the sale of assets or raising funds through borrowing.
“We are not allowed to sell portions of the business or privatise it.”
Despite submitting a draft liquidation application to the department on 13 March, the BRPs maintain that shutting down the Post Office remains a last resort.
Following meeting with Malatsi on Thursday, Rooplal indicated that the plan is to exit the business rescue process – provided funding is secured.
“It is really just dependent on getting approval of this funding so we can handover the business to the shareholder and hopefully a new board that the strategic objectives and the vision can then be implemented.”