Ellerines declared broke and is due to shut down operations

The Barberton Ellerines furniture store branch is one of hundreds countrywide which has been identified by business rescue as non-viable, and will be closed down at the end of the month.

Barberton Times has a copy of the notice issued to Ellerines’ employees in August, in which business-rescue practitioners Les Matuson and Jay Pema said management identified non-viable stores for proposed closure.

According to Roshnee Pillay, Holding Ltd group marketing public relations head, the stores which needed to be shut down, were identified as unprofitable or located in areas in which there was an insufficient market demand.

This company has nearly 900 stores and 8 000 employees. Brands trading under the Ellerines banner included Beares, Wetherlys, Geen & Richards, Furniture City, Dial-a-Bed and Ellerines.

The company had to close down 388 last month and 302 would be shut down this month. All the remaining stores might be closed by January 2015.

This would amount to a large-scale retrenchment, including at the Barberton branch. The notice issued to employees was under the Labour Relations Act. The consultation period ended on November 9 and Ellerines was assumed to or were serving termination notices to the staff affected.

During this publication’s recent visit to the local Ellerines store, we discovered that almost all the furniture which was on display had been cleared.

Two workers were busy with paperwork and assisting customers, which made it clear that the shop was closing down.

Pillay dodged the questions of how many staff was employed at the Barberton branch and how many would be affected.

But according to the notice of the proposed closure, 2 810 positions out of 7 060 were potentially in jeopardy.

According to media reports, Ellerines, which was founded in 1969 and had six chains selling furniture and home appliances across South Africa, owed almost R1,3 billion.

The restructuring plan showed that the company owed R241 million to FirstRand, R150 million to Standard Bank and R100 million each to Barclays Africa and Investec.

Aside from the four banks, most were smaller firms from print shops and grocery stores to gardeners.

It owed R48 000 to South Africa’s largest cinema chain and more than R700 000 to the state broadcaster.