Tuesday, May 17, 2022

Final order granted for liquidation of Bluthorn subsidiaries

The High Court has granted a final order for the liquidation of four companies under Bluthorn Fund Managers (BFM) as if they were one estate. The order by Justice Michael Leburu is just another small victory in BFM creditors’ ongoing quest to salvage something from their P200+ million in investment funds.

The funds were fleeced from district councils, trade unions, and individual investors. BFM’s majority shareholder Eune Engelbrecht opposed the petition, raising points of law questioning among other points; whether the court had the jurisdiction to hear the application in terms of section 342 of the Companies Act, seeking restoration B Thorn (Pty) Ltd onto the Company Register; whether the Petitioner (Liquidator) lacks the requisite rightto move the petition by virtue of section 370(1) of the Companies Act; whether the petition satisfies the requirements of Order 12 Rule 12 of the Rules of the High Court, relating to urgent applications and or Petitions. 

The applicant, liquidator Kopanang Thekiso, had sought the restoration of the four de-registered companies- Bluthorn Holdings, Prime Employee Benefits, Bluthorn Procurement Solutions, and B Thorn- into the Company Register in terms of section 342 of the Companies Act. According to the liquidator, at the time of deregistration, the companies had obligations to BFM and therefore there was a reason for them to continue to be in existence.

He said it was also just and equitable that the subsidiary companies be restored to the Company Register to enable them to be placed in liquidation for their orderly dissolution. Thekiso, through his lawyer Sipho Ziga of Armstrongs Attorneys, sought the Court order to wind up all the companies as one estate on the basis that their business, management and financial operations are so intertwined that it would be in the best interest of their creditors to treat them as one estate(under BFM). He told the Court that Engelbrecht is the controlling mind of the entire Group of companies.

In his judgement Justice Leburu said he was satisfied that the liquidator has made out a case that all the Respondents be restored to the Company Register, in terms of section 342 of the Companies Act; that all the Respondents be placed under liquidation in terms of section 369(b) of the Companies Act, and lastly that the winding up of the all Respondents proceed as if they were one company, under the liquidated estate of BFM.

Leburu ordered that the four BFM subsidiaries be restored to the Register of Companies, in terms of section 342 of the Companies Act.

“All the Respondents are hereby placed under liquidation in the hands of the Master of the High Court, in terms of section 369(b) and(f) of the Companies Act. The Master is directed to appoint Kopanang Thekiso as the Liquidator of all the Respondents, in terms of section 381(2) (b) of the Companies Act, and subject to section 446 of the Companies Act; the winding up of all the Respondents shall proceed together as if they were one company under the liquidated estate of Bluthorn Fund Managers (Pty) Ltd …in terms of section 468(1) of the Companies Act,” Leburu ordered.

An earlier report by the provisional liquidator Christopher John Bray had warned that until all related parties are able to payback or placed under liquidation, there is no hope for reasonable recovery by the investors. He said based on the then figures of assets and liabilities used in the report, assuming all debtors are collected (which Bray said was practically impossible), the dividend payable to creditors would be around 20 percent.

“However as mentioned that this appears to be a pure Ponzi scheme fraud, the likely dividend may be zero and any assets recovered may not even cover the liquidators and legal fees involved,” Bray warned in his report.

Engelbrecht is the majority shareholder (60 percent) in BFM through his company Bluthorn Holdings.

The liquidator submitted that it was only just and equitable to place the companies under provisional liquidation because, among other reasons, the Group operated under the direction of Engelbrecht.

He said it appears from his discussions with Engelbrecht that BFM collected investment funds from the various investor companies. The funds would then be redirected to the three other companies listed above who acted as the retail side of the business. The subsidiary companies would then “lend” the funds to various companies (Investee companies).

Bluthorn Holdings is indebted to BFM in the sum of BW19, 601,286.95. Prime Employee Benefits is indebted to BFM in the sum of BWP119, 606,000.00 and Bluthorn Procurement Solutions owes BFM BWP75, 969,825.16.

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