Durban’s premier networking club — the Pencil Club — has closed its doors with immediate effect.
Club members told TimesLIVE Premium they were shocked when they attended a meeting on Tuesday called by a business rescue practitioner, believing they were going to be told how the club could be financially rescued.
Instead they were told the club would cease trading immediately.
Sources said staff were informed there was no money to pay their February salaries and wages.
TimesLIVE Premium was told they were “devastated” and were planning a sit-in.
Business rescue practitioner Eugene Nel confirmed the club was closed and he was “applying for its liquidation immediately”. He said he would issue a statement with more details.
The club opened its doors about five years ago on prime property on Umhlanga Ridge. It provided a members-only networking club for moneyed individuals, with high-end décor, two restaurants, meeting rooms and a gym.
Annual fees were between R95,000 and R240,000. But, a source said, 40 chosen individuals had each paid R1m to join when it first opened.
It was the brainchild of Marc Rosenberg, the head of Multiply Group, who is still listed as a director of holding company The Pencil Holdco along with Deshan Pillay.
The club went into voluntary business rescue earlier in February after a meeting of directors to discuss its 'financial distress' as it was facing a situation where it could not pay creditors
The club went into voluntary business rescue earlier in February after a meeting of directors to discuss its “financial distress” as it was facing a situation where it could not pay creditors.
According to sources, the money troubles began last year when the club didn’t pay its bond.
In terms of the resolution, Rosenberg and Pillay said they “reasonably believed” the company was financially distressed and would be unable to pay all of its debts within the ensuing six months. However, there appeared to be a reasonable prospect of rescuing the company or, if not, a business rescue process would result in a better return for creditors and shareholders than immediate liquidation.
In a sworn statement in support of business rescue, Pillay said the company commenced business in 2016. He said the company recorded an operating loss before tax of R5.39m for the financial year ended February 2024 and experienced negative cash flows from operating activities of R7.7m for the period ended December 2024.
Pillay said it was estimated the company would need R8m to fund its working capital requirements and repayments of loans. “The company is not able to raise such capital from third parties on the strength of its balance sheet and based on previous experience, and its shareholders are not willing to provide any such capital.”
He said notwithstanding this, the directors believed there was a reasonable prospect of rescuing the business if action was taken immediately and through the supervision of a business rescue practitioner.
The practitioner would, Pillay said, be able to put a temporary moratorium on payments to creditors, negotiate the sale of the business as an ongoing concern or of its assets or shares at a value higher than in a liquidation and where the majority of employees would most likely retain their jobs.
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