Business rescue begins at Daybreak as 2 800 jobs hang in the balance

• Daybreak Foods has said business rescue practitioner Tebogo Maoto will oversee its turnaround plan.
• The news comes after the chicken producer was placed under business rescue.
• The Gauteng High Court handed down a final order last week that said that the producer would need to stop the inhumane killing of its chickens and provide adequate feed for its animals.
• For more financial news, go to News24 Business front page.

Dead chickens at a contract farm for Daybreak Foods. Supplied/ NSPCA

State-owned chicken producer Daybreak Foods has confirmed the appointment of a business rescue practitioner (BRP), as the crisis-hit company aims to save 2 800 jobs and provide a turnaround plan to save itself from financial ruin.

In a statement on Monday, Daybreak said that it had appointed Tebogo Maoto as its BRP, who will aim to stabilise operations nearly a week after it was placed in business rescue owing to the deterioration of its financial position.

In addition, the National Council of SPCAs (NSPCA) had been forced to cull 350 000 chickens on Daybreak’s Limpopo farms at the beginning of the month following complaints of neglect, after a workers’ strike had left the animals without any food and water, reducing them to cannibalism.

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The Public Investment Corporation (PIC), Daybreak’s sole shareholder and creditor, said it supported placing it under business rescue and that the Daybreak Foods board and Maoto would work together to provide a rescue plan.

The PIC said the appointment of Maoto was due to his “vast experience and track record”.

Maoto’s responsibilities will include providing a business rescue plan for Daybreak, which will be subject to a vote by its creditors.

“The board and the BRPs will work together to turn around the business in the interest of all stakeholders. However, it’s the prerogative of the BRP to develop and implement a turnaround plan in consultation with the board,” the PIC said in written correspondence to News24.

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The PIC manages the investments of the Government Employees’ Pension Fund, the Compensation Fund, and the Unemployment Insurance Fund, each of which owns a third of the chicken producer.

News24 previously reported that Daybreak had been beset with a governance crisis for years.

Final court order handed down

The appointment of Maoto also comes after the Gauteng High Court handed down a final order ordering Daybreak to stop the inhumane culling of chickens and provide adequate chicken feed so that the animals can be humanely processed.

The ruling comes after a previous interim order earlier this month, which had a similar finding.

The NSPCA previously launched an urgent filing about a “welfare emergency” occurring at Daybreak farms, where 594 000 chickens were at risk of starvation, cannibalism, injuries and neglect.

In an order handed down on 23 May, Judge Francis Reid confirmed the earlier finding, ruling that Daybreak should also stop breeding its day-old chicks and that hatchlings may not be placed at its farms or facilities until proper feed is provided.

The judge also said that the NSPCA would be allowed to inspect Daybreak’s farms to determine whether the chickens had sufficient feed. Reid further said Daybreak would have to provide a timeline and explanation within five business days as to how it would turn around its welfare crisis at its farms.

In a statement, the NSPCA welcomed the ruling.

“Our teams were on the ground on the Daybreak farms in Bela-Bela and Mookgopong, Limpopo, for 12 days, confronting the grim realities these animals endure. We will remain vigilant in ensuring Daybreak’s full compliance with the court’s order and will continue to monitor the situation closely.”

The NSPCA has said it had already laid animal cruelty charges after it was previously forced to cull 2 000 chickens on the producer’s farms in February.

It also said it would formally lay similar charges for the incidents in April and May, with the evidence-gathering process of videos and photos currently under way. While 350 000 chickens were culled, about half a million were relocated to other producers for food and shelter.

In response to the order made by the court, a Daybreak spokesperson said that it had noted the court’s decision and that the NSPCA had been on its farm premises to inspect the living conditions of the chickens.

“We will allow the BRPs to deal with the substantive matters in the judgment in developing a turnaround plan,” the company said.

After the interim ruling, the PIC gave Daybreak a R74-million lifeline to provide adequate chicken feed to prevent cannibalism, pay outstanding salaries, and cover other operational expenses.

The money was part of a larger R250-million package the company had requested. The first R176 million was provided in February.