Ann Crotty Writer-at-large
Steinhoff’s head office in Stellenbosch, Cape Town. Picture: DAVID HARRISON
Steinhoff’s head office in Stellenbosch, Cape Town. Picture: DAVID HARRISON

Steinhoff got a welcome break on Wednesday when Dutch Investors’ Association VEB agreed to suspend its class action against the embattled retailer.

The decision to suspend the action until April 2019 comes just weeks after the Dutch courts dismissed opposition from Steinhoff and granted VEB the right to proceed with its action on behalf of Steinhoff shareholders.

The action by VEB is the most advanced of three class actions facing Steinhoff, which has written off more than €10bn of assets and has said restatement of its financials may have to go back to at least 2015.

VEB said the suspension would grant Steinhoff time to continue the restructuring of its business and to make further progress with its investigations and the preparation of its financial statements.

Danie van der Merwe, Steinhoff’s acting CEO, said the group was involved in a complex reorganisation as it restructures its financial liabilities and financial statements. “This agreement allows us time to focus on completing these tasks in the interests of all stakeholders.” 

Van der Merwe said the suspension would support the stabilisation of the company’s business, which is in the interest of both former and current Steinhoff shareholders.

Armand Kersten, head of European relations at VEB, said the association had stressed from the start it did not want to trigger an insolvency, which would be detrimental to everybody involved. Following constructive engagements with Steinhoff’s lawyers, he said VEB was confident that the suspension was the best way of achieving the best outcome. The willingness of Steinhoff’s lawyers to engage with VEB clearly demonstrated they were gaining traction in their legal action, he said.

It is unclear if the decision by VEB will have any influence on a similar class action planned by Dutch law firm BarentsKrans, but sources indicated the Dutch courts would be sensitive to the VEB decision.

BarentsKrans did not immediately respond to requests for comment. In September several of SA’s largest institutions announced they were supporting BarentsKrans’s plans to pursue claims on behalf of clients who had suffered losses as a result of the collapse of the Steinhoff share price in December 2017.

In a matter of weeks, shareholders lost more than R200bn as the share price plunged from R56 to around R4. The institutions, which included Coronation, Allan Gray, Investec Asset Management, Old Mutual and Sanlam, accounted for about 20% of the total shareholding.

Media reports indicate that VEB has the backing of about 3% of Steinhoff’s shareholders.