Ex-Tekkie Town owners approach court to halt Steinhoff’s settlement process
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TEKKIE Town' former owners have taken legal action to halt a court hearing aimed at sanctioning Steinhoff's global settlement.
Tekkie Town's former owners yesterday filed a notice of opposition to Steinhoff's Section 155 Creditor confirmation application set down for sanction for the end of the month in the Western Cape High Court.
Former Tekkie Town chief executive Bernard Mostert said yesterday that erstwhile footwear retail owners had significant reasons to oppose Steinhoff's attempts to have the S155 process sanctioned.
“Firstly, the Section 155 proposal treats the creditors of Steinhoff International Holdings (SIHPL) unfairly. Steinhoff NV, the parent company of SIHPL, is actually insolvent. It should be wound up and its assets preserved,” Mostert said.
Mostert said the second aspect was that Tekkie Town founders were in a liquidation application against Steinhoff NV that will only be finalised after the end of September.
“To have the Section 155 sanctioned before the winding-up application of Steinhoff NV has been decided, would be premature and a waste of the court's time. We believe a successful liquidation would yield a better result for legitimate creditors of Steinhoff NV, as well as the many parties who were defrauded by the company,” said Mostert.
Mostert also said the proposed settlement process posed a real risk for the Steinhoff entities that would have to carry the burden of a predatory interest rate of 10 percent for a prolonged period of time, during one of the worst economic periods in a century.
“Frankly, even without any litigation against it, Steinhoff's debt stack and the predatory interest rates it is subjected to is an economic mountain that is too steep to climb.
“Even more so if you consider that much of that interest rates have to be serviced by earnings in developing countries that carry significant currency risk,” Mostert said.
Steinhoff is aiming to have the controversial S155 sanctioned on an urgent basis to complete its attempted global settlement process. Tekkie Town founders said this process would rid it of almost €7.7billion (R130bn) in legal claims, following the revelation of an almost decade-long accounting fraud where €6.2bn in fictitious profits and assets were created to overstate the value of the company.
Last week, Steinhoff shareholders gave their overwhelming support for the global settlement paving the way for the payment of R25bnin compensation claims to claimants who lost out in the furniture retailer's dramatic share price plunge in late 2017.
The Western Cape High Court is set to sanction the settlement later this month and a Dutch court was today scheduled to consider the outcome of the voting of Netherlands claimants.
Tekkie Town founder Braam van Huyssteen and others are embroiled in a legal battle to have Steinhoff liquidated after they alleged they were “duped” into swopping their cash-generative business for shares in Steinhoff in 2016.
The swop happened only a few months before the accounting irregularities and fraud were revealed and Steinhoff could not publish its refused annual financial statements.