Durban’s elite private members' club, The Pencil Club, has officially shut its doors after a failed attempt to reach a financial rescue agreement. The uMhlanga-based establishment, known for catering to the city’s wealthiest individuals and corporate elites, entered voluntary business rescue earlier this month due to severe financial difficulties.
A creditors' meeting held yesterday aimed at finding a solution but ended without compromise. A member, speaking anonymously, confirmed that liquidation proceedings will begin immediately. The club, founded in 2021 as a luxury networking hub for top business figures in KwaZulu-Natal, will cease operations at midnight.
Allegations of Mismanagement and Legal Threats
The club’s collapse has sparked outrage among some members, with allegations of fraud, mismanagement, and non-disclosure surfacing. According to sources, legal action was threatened by some lifetime members, further complicating the negotiations.
Before the meeting, business rescue practitioners stated that they were in talks with various stakeholders but no agreements had been finalized. The formal business rescue plan for the Pencil Group is due on March 19, 2025, but uncertainty remains over whether employees, suppliers, and financial institutions will receive payments.
Staff Left Without Pay and Facing Uncertainty
The sudden closure has left employees shocked and financially stranded, as their February salaries were not paid. Workers, including waitresses, bartenders, cleaners, and chefs, were left in the dark until yesterday.
“We were not informed beforehand that we wouldn’t be paid this month. I don’t know how I will provide for my child,” said one distressed employee. Another claimed the company had previously underpaid salaries without explanation, adding, “We came to work in uniform, expecting a normal day, only to be told the company has been liquidated.”
Debts Exceed R60 Million
Despite its high-end reputation and exclusive clientele, The Pencil Club struggled financially, with debts reportedly exceeding R60 million. An internal proposal suggested that all employees be paid in full before the club's closure, with shareholders raising funds to settle an Absa Bank loan and relaunch the club debt-free. However, it remains unclear whether this plan will materialize.
The closure marks the end of one of Durban’s most prestigious social and business networking venues, leaving members, employees, and creditors in limbo.