The failed rescue effort of the Highveld Syndication (HS) schemes will see the inside of yet another courtroom, reports Moneyweb. 

A group of former HS investors have applied for the business rescue plan of Zephan, the underwriter proposer of the Orthotouch rescue scheme tasked with repaying R4.6bn to 18 700 investors, to be declared unlawful and set aside.

They have also asked for the liquidation of Zephan.

If the application is successful, it may trigger a thorough investigation into whether fraud and theft were responsible for the collapse of the HS companies in 2011 and the failure of the subsequent rescue efforts.

This period saw significant litigation and allegations of fraud and misconduct of those in charge of the two companies during their business rescue proceedings.

The late Nic Georgiou put both Zephan and Orthotouch into business rescue in 2019. This means the process has been dragging on for more than three years, primarily due to Jacques du Toit, the business rescue practitioner (BRP), applying for a declaratory order regarding the rights of former investors in the HS 21 and HS 22 schemes.

Du Toit published a ‘revised business rescue plan’ for Zephan and Orthotouch earlier this year, which was promptly adopted at the end of March.

The rescue plan proposed that an unnamed third party buy investors’ claims for a cash consideration of 5c in the rand against cession of all their claims against Georgiou, his sons and trusts, Hans Klopper and several others.

Klopper is the BRP of the HS companies and a former Orthotouch director.

However, several investor groupings cried foul and labelled it an attempt to prevent a thorough investigation into whether fraud and theft led to the implosion of the HS schemes and the subsequent rescue efforts.

They also allege Du Toit’s actions represent an abuse of the business rescue process and are aimed at protecting key individuals, most notably Georgiou and Klopper, from being investigated.

Du Toit has not yet filed a response to the application. He said he had met with his legal team and would oppose the application and file responding papers in due course.

The latest application comes from an investor grouping led by Advocate Louis Bolt, reports Moneyweb.

A strongly worded founding affidavit, signed by a former investor Robert Black, states that ‘it is clear that the entire business rescue proceedings in respect of Zephan are nothing more than a sham’ and that the revised plan is ‘merely a proposed informal winding-up of the company through business rescue proceedings to avoid the investigative consequences of liquidation proceedings.’

Full Moneyweb report