Durban - Shareholders of Durban’s Audacia Manor, a boutique hotel in a historic double-storey mansion in Morningside, have applied to court to liquidate the company, claiming impatient creditors are knocking on the door, the business is running at a loss, and the owners cannot agree on a way forward.
“The company is devoting all of its time to managing creditors which is materially affecting the proper running of the hotel,” shareholder Dawn Stockdale said in an application which came before acting Durban High Court Judge Guido Penzhorn last week.
Stockdale and her husband, Brian, are trustees of the Stockdale Family Trust which, along with Robert Makinson of the Mak Family Trust and the JKC Investment Trust, became shareholders in Audacia Hotel Pty Ltd in March 2011 after it was bought by Gary Catterick for R13 million.
Stockdale said Catterick required finance to pay the portion not covered by an anticipated mortgage of R8m and it was agreed that her trust and the Mak trust would each receive 25 percent shareholding for R1.25m while the JKC Trust – which Catterick was associated with – would get 50 percent for R2.5m.
She said although the shareholders agreement stated that the managing director would prepare annual budgets and monthly management accounts, this had not been done, accounting records were in disarray and to date there were no audited financial statements.
On top of this, the hotel was faring poorly and was completely dependent on shareholder benevolence and support for survival.
Due to shareholder dissatisfaction, at the end of 2012 Makinson’s wife, Glenda, had been tasked with investigating and sorting out the financials. By then there was antagonism between the shareholders, particularly directed at Catterick “regarding a company he controls apparently using the (hotel’s) funds to pay creditors and staff, the abuse by him of the facilities and the manner in which the hotel was run“.
By March last year, she said, it was apparent that the hotel was in severe financial difficulty, exacerbated by it taking transfer and now having to pay R80 000 a month off the bond while previously it had simply left the occupation interest unpaid.
The taxman, suppliers and the sellers had not been paid. Even staff were owed R70 000 in “tips”.
From time to time, shareholders put in more money and the most pressing creditors were paid.
This month, at an emergency meeting, shareholders were told the business needed a further injection of R1.2m.
“We are not prepared to put in any more money,” Stockdale said.
“The Protea Hotel Group, which was approached with a prospect of it renting the hotel, is not interested because it has to have occupancy of more than 60 percent to be profitable.”
The shareholders are collectively owed R7.7m, the bank R7.6m and the company has further debts of R2.5m.
“The company is commercially insolvent, it cannot pay its debts and it has limped along with the assistance of shareholders for an extended period,” she said.
“The only real prospect is for the business to be sold as a going concern which is effectively what will be achieved if it is wound up.”
The matter was adjourned until next week when the shareholders are expected to have drafted agreements. - The Mercury