The Marketing Federation of Southern Africa on Monday declared itself bankrupt with debts exceeding R5 million ($776.4k; €651.7k; £442.2k).
The decision to fold follows an emergency MFSA board meeting on Friday, called after a due diligence probe revealed the organisation had liabilities far exceeding its assets.
At Friday's meeting MFSA's caretaker chief executive, Brendan O'Donnell, presented the findings of his first month in office. An experienced marketer and former banker, O'Donnell joined the body in early September to conduct an urgent due diligence investigation.
The causes of the collapse are various. The MFSA Board had to intervene earlier this year to save the South African ad industry's prestigious Loeries Awards after it became clear it was in financial difficulty.
In April 2005 the MFSA appointed marketer Dee Blackie as chairperson of its management committee. She stabilised the federation, negotiated a secure future for the Loeries by returning the awards event to the creative community, and instituted a review of the organisation's position.
Her concern about future viability prompted its board to appoint O'Donnell to conduct due diligence. Presenting his findings, he said: "I have done a thorough review of the future financial viability of the MFSA, but it simply has too much baggage to be able to save it in its current form."
O'Donnell continued: "The winding down of the MFSA will be done with sensitivity to its employees, creditors and all other stakeholders and every effort will be made to find ways to ensure the continuation of its important programmes."
MFSA chairman Jabu Mabuza says the body will be wound down in a voluntary, orderly process. "The Board applied their minds to the options available and decided to take the tough but prudent course of action … the MFSA Board wishes to thank the staff who continue to do their best despite difficult conditions."
Mabuza added that the decision leaves the marketing community free to set up a new representative body.
Data sourced from BizCommunity.com (South Africa); additional content by WARC staff