Final week the Johannesburg Excessive Court docket denied former Gupta firm Westdawn’s try and cease publication of a revised enterprise rescue plan for Optimum Coal Mine.
It’s a case of 1 former Gupta-owned firm making an attempt to liquidate one other. Westdawn has a declare of greater than R112 million in opposition to Optimum, and final week introduced an pressing utility earlier than the excessive courtroom to cease Optimum’s enterprise rescue practitioners (BRPs) publishing a revised rescue plan on the grounds that the mine is factually and business bancrupt, and that the BRPs acted with malice to thwart its winding up utility.
Choose Raylene Keightley wasn’t shopping for it. She might see no proof of malice, nor did she grant the pressing order to cease publication of the rescue plan. Nevertheless, the winding up utility might be heard individually in November, whereas the enterprise rescue course of continues in parallel.
Bouwer van Niekerk, lawyer for the BRPs, says the judgment means all collectors will now be given a chance to check and vote on the revised rescue plan. Collectors will vote on the revised plan on Monday (September 28).
A complete of eight Gupta firms had been positioned in enterprise rescue in 2018 (although Westdawn was not certainly one of them) after native business banks and Financial institution of Baroda withdrew banking amenities over suspicions of the Guptas’ involvement in state seize. The withdrawal of banking amenities prevented the Gupta firms from paying employees and collectors, forcing them into enterprise rescue.
Westdawn supplied mining providers, labour and tools to different firms within the group. In an affidavit earlier than the courtroom, joint liquidator Thea Lourens says previous to the enterprise rescue of the assorted firms, Westdawn superior R202 million to a different Gupta firm, Islandsite, which was used to amass plant and tools for mining at Optimum.
Westdawn initially utilized for the winding up of Optimum in November 2019, however the matter was referred to the business courtroom for listening to.
‘Obvious collusive dealings’
Lourens says in an affidavit that since then, new details had come to gentle regarding “the obvious collusive dealings between the enterprise rescue practitioners of Optimum and varied affected events within the property to the overall physique of collectors …” and the lack of the BRPs to rescue the corporate both by promoting its belongings or resuming buying and selling actions.
The BRPs opposed the liquidation try, saying it lacked advantage and urgency. It has additionally requested the courtroom to strike out “vexatious” allegations in opposition to the BRPs, who’re below a statutory obligation to publish a rescue plan and convene a collectors’ assembly – one thing they are saying Westdawn is making an attempt to bypass.
Stated Optimum BRP Kurt Knoop in his replying affidavit: “Westdawn’s voting curiosity in relation to the enterprise rescue plan is a mere 2.61%. This courtroom would clearly wish to know on the listening to of the winding up utility what the angle is of the remaining 97.39% of [Optimum’s] collectors in respect to the plan.”
Knoop additionally argued that Westdawn had tried to mislead the courtroom as to its causes for in search of Optimum’s liquidation, because the rescue of the coal mine is holding up the liquidation of Westdawn itself.
The BRPs say there are three potential gives to purchase the mine, certainly one of them from Centaur which entails the conversion of debt into fairness and the resumption of creditor funds as soon as the mine is cash-positive. Centaur has ceded its claims to Templar Capital.
Optimum Coal Mine is presently on care and upkeep at a value of about R10 million a month.
A key bone of rivalry for the Westdawn liquidators is Eskom’s declare for R1.27 billion which was diminished from about R5 billion after arbitration, with Eskom’s voting weight being fastened at 24%. Westdawn says the BRPs had been then required to publish an amended rescue plan, which was not accomplished. The BRPs replied that the revised rescue plan is within the means of being finalised.
The Westdawn liquidators additionally objected to the settlement in stuffed with a R1 million declare from one other Gupta firm, Oakbay, which they are saying represents undue desire of 1 creditor over one other and removes Oakbay as a possible impediment in arbitrating a settlement with Eskom, the most important creditor. Westdawn claims the prices of this arbitration have been billed to collectors.
The BRPs argued the declare of undue desire doesn’t apply as Optimum has not been liquidated. Choose Keightley didn’t handle these points, which might be handled individually in a later courtroom listening to.
Westdawn additionally raises questions as to how Centaur went from having no vital declare in opposition to Optimum to being one of many largest collectors on account of penalties levied for failure to fulfill month-to-month coal provide thresholds.
Centaur is now one of many firms in line to amass Optimum.
One of many situations being thought of for the acquisition is the conversion of its debt into fairness, with collectors solely prone to see money six years after the mine recommences full manufacturing.
Westdawn joint liquidator Chavonnes Cooper has claimed the Corporations Act is unconstitutional because it permits enterprise rescue plans to be accepted on a vote by collectors, which she claims might be manipulated by the practitioners.
In a liquidation course of the assembly is led by an unbiased third occasion from the Grasp’s workplace and collectors are afforded a chance to object to the therapy of their very own or one other occasion’s declare. Over and above that, there’s a authorized obligation on liquidators to research claims.
The BRPs argue that Westdawn was abusing courtroom processes by bringing an pressing utility and interfering within the rescue course of.
They are saying it’s as much as nearly all of collectors to determine on one of the simplest ways ahead for the mine.