The Pencil Club, Durban’s elite private members’ club in uMhlanga, has been closed after a meeting of members and creditors, which was aimed at discussing the process to rescue the establishment, failed to reach a compromise.

The posh club, which boasts the city’s wealthiest individuals and corporate entities as members, confirmed earlier this month that it had entered into voluntary business rescue due to significant financial challenges.

The club held its first creditors’ meeting yesterday to discuss the way forward. However, according to a member, who asked to remain anonymous, the meeting could not reach a compromise.

Speaking to The Mercury yesterday, he said the networking club, which was founded in 2021, will be shut down at midnight and liquidation proceedings would commence.

“It’s a very sad moment for business persons in Durban as this club was a great networking and social point for top business leaders of KZN.

“Some members at the meeting and on the lifetime members WhatsApp group threatened legal action with allegations of fraud, non-disclosures

and mismanagement. Some members have their own agendas which made a compromise impossible. Hence the demise of the world-class club,” the source said.

In response to enquiries before yesterday’s meeting, the business rescue practitioners said only: “I can only confirm that the practitioner is in negotiations with various parties and that no agreements have been concluded at this stage with regards to any of the creditors, including the employees.

“The business rescue plans in the various Pencil Group matters are due on 19 March 2025 and will be published in due course,” the practitioner confirmed.

This means that, for now, there is no certainty on whether employees, suppliers, or financial institutions will be paid or how much they will receive.

The closure of the club has left its employees in a state of shock and financial disarray.

Yesterday the workers, including waitresses, bartenders, cleaners and chefs, were up in arms after their February salaries, which they expected to receive yesterday, were not paid.

When The Mercury’s sister newspaper, the Daily News, visited the club yesterday it found some workers on the property. Some goods, including uncooked food, had been placed in the corridors.

The workers, who spoke on condition of anonymity for fear of reprisals, expressed their anger at how the company handled the matter.

“We were not informed before today (Tuesday) that we will not be getting our salaries for this month. The company failed to manage the matter well. I don’t know how I am going to cater for my child this month,” said one worker.

Another employee lashed out at the company, claiming that they have been abused as workers.

“There are some months where they paid only half our salaries without any prior explanation. This is exactly what they did to us this month. We are wearing uniforms because we thought that we would be working today. Instead, we were told this morning that the company has been liquidated,” said another employee.

The Pencil Club has been one of Durban’s most exclusive social and business networking spaces. Located in the uMhlanga Arch, the club catered to high-net-worth individuals, offering luxury amenities.

However, despite its initial success, financial difficulties emerged, leading to mounting debts. Internal reports indicate that the club owes creditors well over R60 million.

A proposed internal action plan seen by The Mercury earlier in the week suggested paying all staff in full before closing down operations.

Additionally, shareholders were encouraged to raise funds to settle an Absa Bank loan and relaunch the club debt-free. However it is not known if this plan will be followed.

THE MERCURY