Creditors who lost billions will get very little if Steinhoff is not liquidated, while lenders who bought debt after the fraud was exposed will make considerable profits when they are repaid in 2023.

A Business Day report says that is the argument of former Tekkie Town owners Bernard Mostert and Braam van Huyssteen in their bid to have the owner of SA businesses such Pepkor and US-based Mattress firm liquidated.

The case started in the Western Cape High Court yesterday.

Mostert argues in his affidavit that Steinhoff is clearly insolvent with debt far exceeding its assets, and thus meets the Companies Act definition of insolvency, and should be wound up.

If he and Van Huyssteen are successful, it would mean the owners of profitable businesses such as Ackermans, The Building Company, Incredible Connection and Rochester furniture would be liquidated and the proceeds shared among all claimants and creditors who bought shares or exchanged their companies for Steinhoff shares before SA’s biggest accounting fraud was exposed.

Companies such as Pepkor and Shoe City, however, would continue to exist.

Steinhoff has offered creditors a €1.4bn (about R25bn) settlement in exchange for dropping their legal claims. Its biggest shareholders, Pepkor chair Christo Wiese and pension funds, are set to vote on the Steinhoff settlement offer on 6 September.

In his affidavit, Mostert says the settlement scheme, to which he is opposed, could thwart attempts in a separate court application to have Tekkie Town returned to himself and Van Huyssteen.

‘At face value, the scheme is calculated to rid Steinhoff and its subsidiaries of inconvenience and inevitable embarrassment of having to continue to defend the restitution action, having obtained the Tekkie Town business from the applicants by fraud at a risible fraction of agreed upon price,’ he said.

Much of yesterday’s hearing was about whether financiers could intervene in the case.

The Business Day report notes Mostert and Van Huyssteen have opposed their involvement, arguing the 78 creditors have provided no evidence they were owed money by Steinhoff and had kept details of their debt secret, making it unclear how much they stand to be paid in 2023.

Mostert’s affidavit says financial lenders will make considerable money from the Steinhoff debt as they bought it cheaply and are set to be repaid in full and are earning high interest rates, while people like him who lost their businesses will get little restitution.

His advocate, Deon Isaacs, told the court the creditors need to provide evidence they owned Steinhoff debt. The list of Steinhoff creditors provided to the court has 78 names with no phone numbers or company registration numbers.

‘There are 78 applicants before this court and only one is identified in a meaningful way,’ Isaacs said. ‘If you want to intervene in a liquidation application on the basis you are a creditor, you must establish you are a creditor. It is a simple point.’

Two people claim to represent all 78 creditors, it later emerged in court.

Michael Fitzgerald, the lenders’ counsel, argued that all creditors have a legal right to intervene in a liquidation case.

Judgment in the application for lenders to intervene in the liquidation case is expected on Monday.

Full Business Day report