Companies owned by Steinhoff’s Jooste fend off provisional liquidation
Companies owned by former Steinhoff CEO Markus Jooste are attempting to fend off a provisional liquidation application brought by Absa in the Western Cape High Court by applying for business rescue.
Absa is seeking the provisional liquidation of Mayfair Speculators and freezing the assets of its holding company, Mayfair Holdings, pending the outcome of the provisional liquidation application.
Both applications have been postponed by the Western Cape High Court.
In her affidavit in the application for the freezing of assets of Mayfair Holdings, Absa manager for business support Hester van Niekerk rejected any attempt to seek business rescue for Mayfair Speculators when its debt of R226.3m plus interest was not disputed.
"The only purpose for [applying for business rescue] is simply to delay the hearing of the liquidation application to afford the respondents [Mayfair Holdings and Mayfair Speculators] additional time to continue with the dissipation of assets," Van Niekerk said.
She noted that Mayfair Holdings had rejected an offer by Absa, Sanlam and Investec for it to furnish a guarantee, a pledge not to dispose of assets other than the monthly overheads incurred in the normal course of business, and a pledge and cession of its shares in Lodestone Brands. Mayfair Holdings has assets of R1.47bn including dividend in specie assets, a property and private equity portfolio, and liabilities of about R108m.
Absa has objected to the dividend in specie valued at about R1.5bn, which Mayfair Speculators paid to Mayfair Holdings in August. This was before Jooste’s resignation as a director. The dividend consisted of houses, development properties, Lodestone Brands and a company that manufactured pipes.
"The timing of the dividend in specie [before Steinhoff’s financial irregularities became public and its share price collapsed] and the manner in which it was achieved, the fraud committed on Investec and the financial irregularities and fraudulent transactions within Steinhoff — all of which were masterminded by Jooste — demonstrate that the frauds are likely to continue," Van Niekerk said.
"The declaration of the dividend in specie by Speculators in favour of Holdings constituted nothing less than a fraud, the aim of which was to denude Speculators of its assets so as to benefit Holdings, and the Silver Oak Trust and its beneficiaries, which are, in all likelihood, Jooste and his family," she added.
Investec successfully brought an urgent ex parte application in the Western Cape High Court against Mayfair Speculators and Ruby Street Investments for an anti-dissipation order related to its assets. The sole director of Ruby Street is Daniel van der Merwe who was Steinhoff’s chief operating officer before recently being appointed its interim CEO.
Investec extended R93.5m to Mayfair Speculators on November 29 this year and R26.4m to Ruby Street after they applied to have the amounts advanced to them under existing loan agreements increased.
Van Niekerk said there would be little doubt that the conduct of Mayfair Speculators directors Stephanus Potgieter (Jooste’s son-in-law) and Jooste in inducing Investec to advance a further amount "was nothing less than naked fraud. It constituted a further step in the fraudulent course of conduct".
In his affidavit to court, Investec senior legal advisor Avrom Krengel said that when Jooste and Potgieter took out the additional loans from Investec they must have known about the financial irregularities and the inevitable collapse of the Steinhoff share price that would follow about a week later. They intentionally withheld this information from the bank.
He noted that Investec’s entire exposure to Mayfair Speculators and Ruby Street was secured by Steinhoff shares and that the bank held 8.6-million of the group’s shares.