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Customers of Pule Funeral Services may find themselves in a lurch as the company is facing liquidation.
The Citizen Development Agency (CEDA) has petitioned the High Court seeking a court order that Pule Funeral Services be placed under liquidation.
CEDA and a company called Plain Sail are shareholders in a company called Pule Modisana Holdings. The later which is a holding company has three subsidiaries in funeral services, funeral insurance and coffin manufacturing among them Pule Funeral Services.
CEDA wants the court to issue an order directing that Pule Modisana Holdings and its subsidiaries among them Pule Funeral Services which has a considerable number of customers across the country be placed under liquidation.
In its papers before Justice Christopher Gabanagae, CEDA argues that Pule Modisana Holdings is insolvent. According to CEDA, the affairs of Pule Modisana Holdings are being conducted in a manner that is prejudicial to it in its capacity as a creditor and shareholder.
“This is because the failure by the Respondent (Pule Modisana Holdings) to audit its financial statements presents real difficulties for the Petitioner (CEDA) insofar as the Petitioner’s own accounting processes are concerned,” CEDA said.
According to CEDA, in addition, Pule Modisana Holdings has since investment failed to hold any substantive Annual General Meetings in order to present its audited financials to its respective shareholders. “The Board of the Respondent has never prepared an annual report of the respondent as envisaged in terms of section 212(1) of the Act,” said CEDA in its petition to the High Court.
It also states that the following business has never been transacted as contemplated by section 105(4) of the Act; the consideration and approval of the financial statements. The appointment of any auditor’s reports and an opportunity for shareholders to question, discuss or comment on the management of the Respondent...”
The financial institution also cited a due diligence report that was conducted by Grant Thornton which found that “debt exceeds equity because negative retained earnings have been eroded.”
It was also found that there was “cash-flow crisis because there is no working capital to facilitate daily operations.”
In his answering affidavit, Plain Sail’s Director Tshepo Pule admitted that Pule Funeral Services has five branches across the country. He denied that there is any justifiable ground or basis for the liquidation of Pule Modisana Holdings.
“In particular it is denied that Pule Modisana Holdings is insolvent. It is further denied that the affairs of Pule Modisana are being conducted in any manner which is prejudicial to the petitioner. It is further denied that the petitioner is a creditor of Pule Modisana Holdings in any substantial amount or in any amount warranting liquidation thereof,” he said.
Pule added that the “Petitioner had been responsible for the 1st Respondent (Pule Modisana Holdings” and subsidiary’s (sic) financial problems/ effectively the money that was injected by the Petitioner was mostly use to fund the huge wage bill which exercise did not benefit the 1st Respondent or its subsidiaries, did not focus on expansion strategies which the respondent applied the loan for that sole purpose.”
CEDA is presented by Rantao Attorneys while Pule Modisana Holdings is represented by Nyamambi Attorneys.