The Pretoria High Court has forged critical doubt over the impartiality of Jacques du Toit because the enterprise rescue practitioner (BRP) of two firms from which 18 700 former Highveld Syndication (HS) traders are hoping to recuperate among the R5 billion they invested within the failed schemes.
In a scathing judgment handed down on Thursday (8 December), Judge Norman Davis infers that Du Toit was appearing within the curiosity of Georgiou and entities associated to him – and “directly against the investors” – in his software.
Du Toit was in search of a declaratory order concerning the validity of buyback agreements Georgiou signed with HS21 and HS22 traders.
Davis dismissed the applying with punitive prices and was extremely vital of Du Toit for bringing it within the first place, as at the very least two earlier judgments, one from the Supreme Court of Appeal, discovered the agreements to be legitimate.
The software has delayed the enterprise rescue processes of the 2 Georgiou-linked entities, Orthotouch and Zephan, of which Du Toit is the BRP.
The judgment reaffirms that 1000’s of former traders in HS21 and H22 could declare reimbursement by way of the buyback agreements, leading to Zephan and the Nic Georgiou Trust probably going through claims of greater than R3 billion.
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Scathing
In the judgment, Davis writes: “It is obscure why the BRP didn’t observe the prevailing judgments concerning the precise buyback agreements within the context of the precise information on this matter …
“The purported neutrality of the BRP can also be in query. While he portrays being unconcerned about which method the choice goes, he was very partisan in his founding affidavit … as to why the buyback agreements shouldn’t be enforced.
“Even the relief claimed is framed in a one-sided fashion. The explanation for this approach might be the following: should HS investors no longer have buyback claims against Zephan, it would be to the benefit of Zephan.”
Later within the judgment, Davis writes: “Ordinarily, there should be no conflict apparent in respect of a BRP merely claiming declaratory orders to “clarify” a place. A battle is, nevertheless, manifested within the method by which the BRP on this matter slanted his software directly against the HS traders.”
Du Toit’s response
In response, Du Toit denied being partisan and mentioned he solely utilized for the declaratory order to restrict potential future litigation.
“I had/haven’t any intention to behave to the detriment of the collectors/traders, on the contrary, I’m making an attempt my greatest to deliver certainty and readability throughout the ongoing litigation between numerous events.
“Unfortunately, the decide interpreted my intention incorrectly and didn’t give a lot readability on the best way ahead, besides by confirming that the claims had been ceded, which gave rise to extra authorized questions which I should interact with my authorized crew on.
“My software was to not get a judgment against any affected celebration however purely to hunt the court docket’s recommendation on which path to observe, my considerations had been positioned in entrance of court docket which posed a problem in finishing the enterprise rescue course of.
“It was clearly stated that I will abide by the court ruling whatever it was but expected more clarity from court.”
Regarding the punitive value order, Du Toit mentioned he does “not think it was proper under the circumstances” and can search authorized recommendation as as to whether he’ll enchantment it.
He additionally acknowledged that the authorized prices will likely be funded by cash from Orthotouch or Zephan.
(Read Du Toit’s full response right here.)
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Business rescue
The buyback agreements had been distinctive to HS21 and HS22, by which Georgiou undertook to repurchase the traders’ shares after 5 years.
Du Toit contended that these agreements fell away when the HS firms had been positioned in enterprise rescue in 2011 and later restructured in 2014 by way of a Section 155 Scheme of Arrangement. This restructuring tasked Orthotouch with repaying traders. Zephan was the underwriter of the Orthotouch scheme.
However, Georgiou positioned each firms into enterprise rescue in 2019. After his appointment as BRP, Du Toit utilized for the declaratory order regardless of a number of courts, together with the Supreme Court of Appeal, ruling that the buyback agreements had been legitimate.
This software has delayed the enterprise rescue course of by practically two years.
Bolt’s response
Advocate Louis Bolt, representing a number of HS21 and HS22 traders, agreed with the judgment.
“We are nevertheless of the opinion that the decide ought to have ordered that the BRP pay the prices accessioned by the applying in his private capability as there was no benefit within the software and which was introduced as a blatant delaying tactic to stop our purchasers from implementing their rights to execute the judgments granted against Zephan, Nic Georgiou and his belief and additional to generate charges for himself and his authorized advisors.
“We additionally help the decide’s observations concerning the apparent and blatant bias displayed by the BRP in the direction of the HS traders.
“We intend to now set the other pending applications, including the sequestration application for Mr Georgiou’s estate, down for hearing on dates to be allocated by the Registrar of the Court.”
Highveld Syndication Action Group
Jacques Theron from Theron and Partners, who represents the Highveld Syndication Action Group (HSAG), which has obtained certification for a category motion primarily based on the buyback agreements, welcomed the judgment “as it supports the HSAG court cases”.
“Since the outset, the HSAG skilled, what the court docket right here labelled as ‘back door appeals’, by each Hans Klopper [BRP of the HS companies] and Jacques du Toit, as BRPs of their fiduciary positions, while spending a whole bunch of 1000’s of rands on litigation.
“The court displayed its displeasure at the conduct of Du Toit and sent out a strong message to people in fiduciary positions literally fighting with other people’s money,” Theron mentioned.
Orthotouch and Zephan enterprise rescue course of
Du Toit mentioned a digital administrative portal will likely be launched early subsequent yr and {that a} digital creditor assembly is scheduled for 10 January.
He additionally mentioned he would, following the judgment, “reassess and redraft” the printed enterprise rescue plans.
“The reimbursement of collectors vetted claims will, as beforehand acknowledged, be achieved by means of the issuing of Accelerate shares. The settlement with the celebration who will likely be making the shares obtainable have been accomplished however stayed unsigned pending the declaratory judgment.
“The shares will likely be made obtainable on the Compushare account underneath my management for issuing when the enterprise rescue plan has been authorized and sanctioned by the court docket.
“Kindly note that creditors will vote in their personal capacities on the IT database which make the identity of the proposer of the shares irrelevant, I frankly do not care who put up the shares as long as we get a return to creditors. The Creditors need to vote in favour of the return offered, or liquidation will be the end result.”