Plucked — Trouble at Daybreak Foods as Altron halts services

Altron Digital Business has suspended IT services at Daybreak Foods, further disrupting critical operations at the poultry producer and complicating its business rescue efforts.

“The temporary shutdown of the IT services by Altron Digital Business has negatively affected the business rescue proceedings in respect of the due diligence process,” said Tebogo Maoto, Daybreak’s senior business rescue practitioner.

Key functions including employee communication, payroll processing, payment to essential suppliers and email services have all been affected, hampering efforts to stabilise Daybreak Foods.

Despite a payment of R1.4-million made on 31 May to restore services, Altron has refused to lift the suspension, citing unresolved historic debt, which is now part of the business rescue legal process.

Altron confirmed that although payments have been received, they did not satisfy the terms of a settlement agreement reached earlier this year to address Daybreak’s long-standing debt. “The issue of non-payment has been a persistent challenge for over 12 months,” Altron said.

It added that it continued providing services and seeking solutions, but was forced to suspend IT operations because of Daybreak’s failure to comply with the agreement. Talks with the business rescue practitioner were continuing in the hope of securing a grace period to resume essential services, and the matter was now with the lawyers “to find a settlement”.

The IT shutdown compounds an already dire financial and operational crisis. Daybreak held two consecutive online Q&A sessions for creditors and employees – the first on Monday, 23 June, and a follow-up the next day – that laid bare the company’s deepening financial woes and the impact on workers.

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During the Monday session, company representatives revealed that Daybreak was “not able to pay creditors” and was “in financial distress”. This stark admission set the tone for a Tuesday session centred on workers’ salary payments, due on 25 June, and the increasingly desperate situation they face.

During the session, workers were told that some company functions had been disrupted and that it had “limited funds in the bank” and “insufficient funds at this stage to make payments of the salaries”.

Faced with unpaid wages and no clear resolution, one employee voiced the harsh reality confronting many: “Daybreak needs to retrench employees.” This reflects the desperation among staff, who see retrenchment as the only way to access UIF benefits and survive financially.

Daybreak, however, said it was actively working to provide relief to employees. It said the process for UIF claims had been expedited and it was hopeful of securing funding to help workers during this crisis.

Read more:  Daybreak Foods: Chicken producer hopes business rescue will hatch a turnaround

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Animal welfare crisis

The roots of Daybreak’s collapse run deep. Earlier this year, investigations exposed systemic animal welfare failures at the company’s broiler operations. More than 1 million chickens died or suffered prolonged distress. The National Council of SPCAs (NSPCA) called it “a grave and morally reprehensible failure” and images of emaciated birds packed into overcrowded sheds and cannibalising one another shocked South Africans.

The Johannesburg High Court intervened on 23 May, ordering Daybreak to stop inhumane culling, provide adequate nutrition, halt new chick placements and grant full access for inspections. The court criticised the company’s leadership for “financial mismanagement of the available funds”, which directly contributed to the animal welfare crisis.

In response to mounting pressure, Daybreak entered voluntary business rescue proceedings – a move that raised questions about transparency and accountability. Board chairperson Bojane Segooa resigned amid public outrage over a R625,000 payout to her, and Daybreak’s majority shareholder, the Public Investment Corporation (PIC), faced scrutiny for oversight failures.

Workers and contractors remain unpaid, and the NSPCA continues to pursue criminal charges.

Read more: ‘Reprehensible failure’ — NSPCA files criminal charges against Daybreak Farms directors

Now, with Altron’s suspension of IT services, the business rescue process faces a critical hurdle. The practitioner’s ability to access historic data and communicate effectively is severely compromised, threatening efforts to stabilise Daybreak and protect the interests of creditors, employees and animals alike.

Maoto said he was confident that an amicable solution with Altron would be found in due course, but the path forward remains uncertain. For a company still reeling from one of South Africa’s most shocking corporate and animal welfare disasters, the IT shutdown is a stark reminder that the crisis is far from over.

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A history of failure

Founded in 2001 as a small-scale poultry operation, Daybreak Foods grew to become a notable supplier of fresh and frozen poultry products in South Africa. In 2005, it was acquired by Afgri, a large agricultural services group historically owned and managed by white South African interests, for R110-million, as Afgri re-entered the broiler market.

Under Afgri’s management, Daybreak operated within an integrated agricultural conglomerate that included feed mills and abattoirs. Despite this, the company faced sector-wide challenges such as volatile feed costs and competition from cheaper imports.

In 2015, Afgri sold its poultry operations to a black economic empowerment (BEE) consortium led by Matome Maponya Investments, with financial backing from the PIC. This transfer was part of a broader government initiative to increase black ownership in agriculture. The company was rebranded as Daybreak Farms and later Daybreak Foods. The PIC held a significant share alongside the consortium and employees.

Since the BEE acquisition, Daybreak’s difficulties have only escalated. Years of financial strain, governance lapses and operational mismanagement culminated in a liquidity crisis. Despite the PIC’s full control and a R74-million capital injection, unpaid debts surpassed R140-million, and a request for a R250-million bailout was declined earlier this year. Leadership instability included four CEOs resigning in four years, leaving workers unpaid and operations stalled.

Political pressure intensified as the Democratic Alliance (DA) called for parliamentary hearings and an investigation by the Financial Sector Conduct Authority into the PIC’s oversight failures. The DA condemned labour abuses, animal cruelty and mismanagement, highlighting unpaid workers and the mass euthanisation of more than 350,000 chickens under dire conditions.

The party also filed a Public Access to Information Act request demanding that the National Treasury disclose the steps it had taken after the Mpati Commission of Inquiry made recommendations to rectify issues related to PIC governance. With public funds exceeding R1.4-billion at stake, the DA has demanded transparency and accountability.

The continuing IT shutdown and stalled business rescue efforts deepen uncertainty, leaving thousands of workers and hundreds of thousands of chickens caught in the fallout. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.

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