Big South African solar company goes into liquidiation

Solar company Hohm Energy has entered into voluntary liquidation with the Companies and Intellectual Property Commission (CIPC).

The company informed creditors of the move this week. At the end of July 2024, it entered into a business rescue due to cash flow challenges and its inability to service existing debts.

The company connects homeowners with installers and financiers to ease rooftop solar panel installation.

Hohm has secured deals to provide homeowners with financing options from several major banks, including Investec, Nedbank, FirstRand, and Capitec. Customers could pay for the panels, inverters, and batteries over several years.

According to reports about the company’s financial struggles, it hit hurdles during the court of the year as the energy market shifted in response to the reductions in load shedding, which caused demand for solar to dwindle.

Because Hohm and other companies in the space were effectively startups thriving during a time of crisis, it was not poised to handle a rapid turn in the market.

Latest in line

Hohm is part of a wider trend in businesses going into business rescue or being liquidated in South Africa.

In August, South Africa bade farewell to another 133 businesses in July 2024, taking the total number of companies and close corporations liquidated year-to-date to 892.

Most of the closures are voluntary liquidations.

Some of these distressed businesses are well-known and popular brands, such as Ellies, West Pack, AutoZone, Cross Trainer and PetZone.

Ellies entered business rescue after failing to acquire bank financing to purchase Bundu power. The group went into final liquidation in July.

Business rescue practitioners said that the group faced no reasonable chance of being rescued. However, the Ellies brand will live on under SMD Technologies.

Autozone is the largest privately owned automotive parts retailer and wholesaler in South Africa. In 2014, it entered business rescue after its performance did not meet expectations following a private equity transaction funded by debt.

Due to growing debt service obligations, it needed to move cash from operations to meet debt servicing costs. By 2021, it had fallen into a cycle of negative operating leverage.

However, given its strong national brand, the company believes it will recover.

West Pack also believes that it will succeed in restructuring its business.

The group entered business rescue in May as it was financially distressed and unlikely to pay its debts when they became due over the next six months.

One of its business rescue initiatives involves exploring offers to acquire some of West Pack’s assets or the whole business. It also plans to sell non-core assets to improve its financial position.

Petzone was also placed under business rescue in May, similar to its holding company WestPack, due to its inability to pay debts when they are due amid its financial distress.

Non-performing stores have already been closed, and discussions and processes to sell non-core assets have started.

Read: SPAR could save the day for major retailer in business rescue