Daybreak Foods enters voluntary business rescue amid starvation scandal, mounting debt

SOUTH AFRICA – Daybreak Foods, South Africa’s state-owned poultry producer, has entered voluntary business rescue after a series of financial collapses and operational failures left its future hanging in the balance.

The company confirmed this week that it has appointed Tebogo Maoto as the business rescue practitioner (BRP) following a board resolution filed in May under Section 129(1) of the Companies Act. 

The move allows the company to reorganise under legal protection as it battles to secure emergency funding and stave off collapse.

The decision comes on the heels of a devastating scandal that saw over 350,000 chickens euthanised across Daybreak farms between April 30 and May 6 after the company failed to provide feed. 

Animal welfare officials from the National Council of Societies for the Prevention of Cruelty to Animals (NSPCA) discovered scenes of extreme neglect, starvation, and cannibalism at several Daybreak sites in Gauteng, Mpumalanga, and Limpopo.

According to the NSPCA, 75 officers were dispatched to euthanise birds too malnourished for commercial slaughter humanely. 

Over 500,000 chickens were rescued, but the exact death toll remains unknown due to the scale of the crisis. 

“Our officers found skeletal birds, empty feeding lines, and horrifying scenes of cannibalism,” the NSPCA said, adding the conditions were replicated across multiple facilities.

The incident has intensified scrutiny on the company, already under pressure from employees protesting over unpaid wages and from the public investment community over its governance and financial management.

Efforts to stabilise operations hit a wall

Daybreak had previously turned to the Public Investment Corporation (PIC), a key shareholder and creditor, for support. 

Although the PIC approved a bailout of US$4 million (R74 million), the Johannesburg High Court last week ruled that the intervention was insufficient. 

In response to a case brought by the NSPCA, the court issued a final order compelling Daybreak Foods to implement corrective measures to improve animal welfare standards at its Limpopo operations.

The court further dismissed the company’s assertion that the PIC funding had stabilised operations, noting that “significant gaps remained” in addressing the systemic issues at play.

Interim board chairperson Dr Charlotte Nkuna said the business rescue process has the full backing of both the Board and the PIC. 

“The primary goal is to develop a workable rescue strategy that can address current funding needs while laying the groundwork for future stability and profitability,” the board stated. 

According to Daybreak, operations will continue during the rescue period under legal protection from creditors and other enforcement actions, as stipulated in Section 133 of the Companies Act.

The appointment of Tebogo Maoto, described by the company as having a track record in leading business rescues and corporate restructurings both within South Africa and in other regions, signals an attempt to bring experience to what is shaping up to be one of the most closely watched corporate turnarounds in the country.

However, with approximately 2,800 jobs on the line and public confidence severely shaken, the road ahead for Daybreak remains uncertain.

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