The former owners of Tekkie Town can proceed with their liquidation application against Steinhoff International, after the Western Cape High Court dismissed the intervention application of two parties and confirmed that the local courts have jurisdiction to hear the case.

According to a Moneyweb report, the court dismissed the applications of SIHNV Financial Creditors (a group representing Steinhoff creditors) and Frederic Verhoeven and Christiaan Robert Zijderveld (two Dutch administrators who were administering settlement proceedings on behalf of Steinhoff in the Netherlands) to intervene and oppose the liquidation application.

The judgment paves the way for the Tekkie Town owners to continue with the liquidation application, which is set to resume on Thursday.

The former Tekkie Town owners, including Braam van Huyssteen and Bernard Mostert, sold their interest in the business to Steinhoff in 2016 for R3.2bn in Steinhoff shares. However, these shares became virtually worthless when Steinhoff’s share price imploded in December 2017, after severe accounting irregularities emerged.

The former Tekkie Town shareholders did not institute a claim against Steinhoff as other investors did, but instead initiated legal proceedings for their former business to be returned to them.

However, earlier this year, they filed for Steinhoff’s liquidation.

Mostert said in response that the ‘attack on our bid to liquidate Steinhoff could have been derailed by the attempted intervention of the hedge funds that bought Steinhoff debt after the revelation of the fraud and also by the technical argument around whether SA law provides for the winding up of an external company'.

Full Moneyweb report

In oral arguments, Steinhoff maintained it cannot face a liquidation hearing in a South African court as its parent company is incorporated in the Netherlands.

The group has also denied that it is commercially insolvent, says a Fin24 report.

Judge Hayley Slingers did not provide reasons for her decisions. While Steinhoff argued that under the 2008 Companies Act it should be classed as an ‘external company’, lawyers for Tekkie Town contended that winding up proceedings are still governed by an earlier version of the Act, which makes provision for external companies to be wound up.

Meanwhile, voting also started yesterday on Steinhoff's R25bn settlement proposal with creditors and claimants.

In a market update, the retailer announced that it had received support from financial creditors and market purchase claimants in the South African leg of proceedings.

Voting will continue tomorrow and Thursday.

Full Fin24 report