Legal Articles and Guides
President Jacob Zuma’s nephew Khulubuse Zuma has taken no steps yet to oppose an application for his provisional sequestration for about R1.52bn owed to Pamodzi Gold companies although this could open up a full investigation of his financial affairs for the past eight years, says a Business Day report.
The advertising partner for Western Province Rugby (WPR) has laid criminal charges against it, after directors and its chief executive failed to provide the liquidated company’s ‘statement of affairs’ to the Master of the High Court, as required by the Companies Act of 1973.
Liquidators of the Pamodzi mines have applied for the sequestration of Khulubuse Zuma, nephew of the President, after he failed to meet a debt repayments schedule. Rapport notes that Khulubuse Zuma is supposed to repay debt in instalments of R500 000 a month.
In what a Pretoria News calls a ‘scathing’ attack on the Law Society of the Northern Provinces regarding its failure to act against its former president Ronald Bobroff and his son Darren Bobroff for close to five years, two judges last week ruled that the society had to foot the legal Bill for some of the applications brought before court.
The businessman accused of colluding with Mercantile Bank in alleged illegal asset stripping worth hundreds of millions of rand said he will ‘vigorously defend this action’ as he believes the case ‘is based on unfounded allegations’, says a Fin24 report. Alert Steel is seeking damages of R351m allegedly caused by businessman Rayhaan Hassim, his company West Lake Trade and Investments, and Mercantile Bank following what it believes was an illegal liquidation process in 2014.
Mercantile Bank has been taken to court over allegations it conspired with an alleged fraudster in illegal asset stripping worth hundreds of millions of rands. A Fin24 report says the litigation could not have come at a worse time, as the Portuguese-owned and SA-based bank is up for sale. Alert Steel is seeking damages of R351m caused by alleged ‘mastermind’ Rayhaan Hassim, Mercantile Bank and West Lake Trade and Investments following what it believes was an illegal liquidation process in 2014.
Cash-strapped state-owned airline SA Express is facing an application for liquidation because it cannot pay its debts, says a BusinessLIVE report. The application has been brought in the Gauteng High Court by aircraft leasing company Solenta Aviation on the basis of the non-payment of R87.3m and will be heard on 11 August if it is not opposed. But SA Express acting CEO Victor Xaba said the airline did intend to oppose the application because of a dispute over the amount owed.
The Gupta-owned company Optimum Coal Mine has issued a summons for R10m against a small company. Optimum alleges Re-Action Consulting, which builds public health clinics, has published false and defamatory statements in court papers, says a GroundUp report. Re-Action is litigating to get Optimum wound up for being unable to pay its debts.
Changes to the legal framework and regulation of business rescue, particularly to registration of practitioners, will take effect as from 1 October 2017, says a Fin24 report. Business rescue came into effect via the Companies Act in 2011. ‘Although relatively successful, business rescue has received criticism resulting from apparent flaws in the appointment process and quality of business rescue practitioners.
After driving Optimum Coal into business rescue last year, thereby endangering almost 2 000 jobs at the mine, Eskom suddenly reached a settlement that gave the Gupta family a 75% discount on the R2.1bn fine it had levied on the company at the time it was owned by global commodities trader Glencore. Business Day says in March this year, Eskom agreed to accept a R500m settlement for the non-performance penalties it had levied on Glencore.
A 100% black-owned Port Elizabeth construction company faces liquidation, with the resultant loss of 300 jobs, following claims that the Nelson Mandela Bay Municipality owes it R117m. The Herald reports the Eastern Cape High Court (Port Elizabeth) has provisionally wound up Masakeni Construction (Pty) Ltd, ordering a commission of inquiry in terms of the Companies Act.
Rockwell Diamonds – suspended from trade in Johannesburg and Toronto – has filed for business rescue to stave off attempts by a contractor to liquidate the company, says a BusinessLIVE report. Rockwell had an interim liquidation order awarded against it in March by the Northern Cape High Court (Kimberley) after which it applied for trade in its shares to be suspended.
The Gauteng High Court (Johannesburg) this week placed the estates of personal injury lawyers Ronald and Darren Bobroff under provisional sequestration, according to a report by investigative journalist Tony Beamish on the Moneyweb site. It notes the father and son duo are fugitives from justice who fled to Australia last March when the Hawks requested that they hand themselves over to be arrested.
SARS cannot prevent a liquidator from taking possession of property by virtue of the fact that the duty and VAT of the property has not been paid, says Virusha Subban, Claire van Zuylen and Yue Li, of Bowmans, in an analysis on the Polity site. They examine the recent SCA judgment in CSARS v Van der Merwe NO, where it was held that a liquidator is entitled to take the possession of the property in terms of the Insolvency Act, even though the duty and VAT of the property has not been paid to SARS.
When you are struggling to recover your money from a recalcitrant debtor company, applying for its liquidation can be a very powerful collection tool. Suddenly the directors are faced with the imminent prospect of completely losing control of their company, its business and its assets to a liquidator. If the directors are just fighting a rearguard action to delay paying you, a liquidation (or “winding-up”) application should immediately focus their minds on finding a way to settle the debt.