Drip Footwear ‘allowed to go into liquidation’

The advertising agency that was successful in its court bid to have Drip Footwear liquidated says it tried as far back as 2022 to negotiate with the company over its R20m debt.

“There were negotiations to try to settle some time in 2022, and Drip actually signed an acknowledgment of debt in terms of which they were supposed to make monthly payments — but they didn’t. So that’s what led to the liquidation application,” a member of the legal team that represented Wideopen Platform (Wideopen) told the Sunday Times. 

Wideopen — which specialises in large, high-impact advertising — was granted the liquidation application by the Johannesburg high court on September 9.

The news of Drip’s sudden liquidation this week sent shock waves through the industry, raising questions about the circumstances leading to the popular brand’s demise. It had 14 stores across South Africa.

The popular sneaker brand was established by Lekau Sehoana in 2019 and became widely recognised through its extensive advertising campaigns.

The company’s liquidation has been questioned by some on social media as a possible strategic ploy to prepare the way for a new wave of businesses owned by founder Lekau Sehoana.

The Sunday Times spoke to two employees who wanted to remain anonymous for fear of being victimised. One was part of Drip’s management and worked closely with Sehoana, who is a listed director of 26 companies, some of which were registered in late 2023 and early this year.

One of them shared a diagram showing what appears to be a list of companies in different sectors operating under “The Legacy Trust” banner. Sehoana and a bank are named as trustees. However, the Sunday Times could not independently verify if the bank is indeed a trustee.

Among the companies are Ubuhle Bendalo Investment Group and Amanzi Brands, which both list Sehoana as executive chairperson and CEO respectively.

“He [Sehoana] sent this diagram mid-September, and it was basically outlining his big plan and how he was going to branch out [under] The Legacy Trust,” the employee said. 

Sehoana is listed as a director of some of the companies in the diagram.

The staffer claimed Sehoana knew about the liquidation process from February and was apparently advised against making any new appointments. Staff members were also allegedly told of the process last week, the employee said.

The staffer also shared a brief letter, apparently from Tutor Trust, one of the appointed liquidators, dated September 26 2024, outlining its mandate and providing contact details.

The same liquidator is apparently set to meet former staff members on Monday to discuss a way forward.

The former manager also spoke of how Sehoana had been venturing into new businesses for a while, and said he did not try hard to save Drip.

The company’s liquidation has been questioned by some on social media as a possible strategic ploy to prepare the way for a new wave of businesses owned by founder Lekau Sehoana.

“He is busy with a lot of things and running many companies. For Drip to fail like this looks very suspicious. He is also politically connected, so there are a lot of people who could have saved Drip if he had wanted it to survive,” the employee said. 

Another staff member said that, while they found out about the liquidation only last week, the company’s financial issues had come to light as far back as 2022.

“We knew we had financial issues — he would say that — but there was a promise everything was [under control], and that there were people willing to invest in the company.”

However, Sehoana’s estranged wife, Lebogang, told the Safe Space Chats podcast hosted by Perseverance Maremeni she knew Sehoana would do everything possible to prevent her from getting anything from the company. This has led to speculation about whether the company was allowed to fail. 

Earlier this year, reports emerged on the possible liquidation of the company, but Sehoana brushed this off in an interview with TshisaLIVE.

“I’m in high spirits. There’s nothing that’s going to happen to Drip — that’s for sure. We will continue selling, and we will continue pushing and inspiring. Whatever happens, it happens because we are in business, and we will learn as we go,” he told the publication at the time.

Sehoana declined to speak to the media about the latest developments.

Tiaan Herbst, a certified business rescue and turnaround practitioner at the Southern African Advisory Company, said the writing had been on the wall for the company for some time.

He touched on the number of billboards the company had, especially in Johannesburg, saying there were “too many” of them. Not even successful brands such as Nike and Louis Vuitton would spend as much money on this form of advertising.

“I evaluated Drip as a business because they had all these billboards. I think it didn’t understand its cost structure and valued itself [at] far more than it was worth, and it actually tried to over-market itself.

"[Sehoana] spent so much money on this marketing without really looking at the cost structure of the company. And it is unfortunate it went into liquidation, because he had an opportunity to rectify [this] through business rescue, but I think there was naiveté [and] maybe some incompetence in managing the company,” Herbst said.