Daybreak Foods Enters Business Rescue to Save 2,800 Jobs Amid Mounting Financial Woes

One of South Africa’s state-owned poultry producers, Daybreak Foods, has entered business rescue amid severe financial distress, with more than 2,800 jobs now at stake. This move marks a critical moment for the company as it tries to navigate a complex mix of funding challenges, legal battles, and operational instability.

Financial Struggles Reach a Breaking Point

The poultry giant, previously reliant on state-backed support, was forced into voluntary business rescue in May 2025 after a board resolution filed in accordance with Section 129(1) of the Companies Act. The company has struggled with liquidity for months, further worsened by mass culling of underfed birds, unpaid employee salaries, and worker protests.

An attempt to resolve its financial troubles through a R74 million injection from the Public Investment Corporation (PIC) fell short, with the Johannesburg High Court later rejecting the argument that the funds had resolved the crisis.

New Leadership and a Road to Recovery

Rescue proceedings will now be led by Tebogo Maoto, a veteran in corporate restructuring and business turnaround efforts. Maoto is expected to spearhead a plan that stabilizes operations, secures new funding, and protects thousands of jobs.

“The business rescue proceedings will focus on stabilizing operations while developing a turnaround strategy and addressing funding shortfalls,” Daybreak said in a statement. The company also emphasized its intent to work closely with the PIC and stakeholders during this process.

Animal Welfare Ruling Adds Pressure

To complicate matters further, Daybreak was hit with a final court order last week following legal action by the National Council of SPCAs (NSPCA) over allegations of animal cruelty at its Limpopo facilities. The order requires the company to implement corrective animal welfare measures — adding another layer of urgency and scrutiny to its business recovery plans.

Legal Protection During Rescue Period

Under Section 133 of the Companies Act, Daybreak Foods has been granted temporary protection from legal and enforcement actions during the business rescue process. This moratorium allows the company and the appointed Business Rescue Practitioner (BRP) time to develop a rescue proposal without further legal distractions.

A Stakeholder-Led Effort to Save the Business

Dr Charlotte Nkuna, interim chairperson of Daybreak Foods, remains hopeful. “We welcome the appointment of the BRP as part of the collective effort, together with the Public Investment Corporation, to rescue the company and save approximately 2,800 jobs,” she said.

The PIC, as both a major shareholder and creditor, is expected to play a central role in shaping the rescue plan. The focus is not just on short-term survival, but also long-term sustainability and future profitability.

What Comes Next

With thousands of livelihoods at risk and pressure mounting from regulators and the public, Daybreak’s turnaround strategy will need to be both fast and credible. While the road ahead is uncertain, the appointment of a skilled business rescue practitioner and strong backing from the PIC provide a foundation for hope — if the right steps are taken in time.

{Source: IOL}

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