Steinhoff ready to oppose liquidation application by ex-Tekkie Town execs

Tekkie Town executives request matter be heard on an urgent basis on May 24

STEINHOFF International said yesterday it would oppose an urgent liquidation application filed by former Tekkie Town executives in the Western Cape High Court.

The Tekkie Town executives have requested the matter to be heard on an urgent basis on May 24.

The standoff between the two parties is a result of the December 2017 accounting scandal, which led to a more than 95 percent decline in Steinhoff’s share price following the admission to irregularities.

Steinhoff acquired Tekkie Town for R3.2 billion in 2016 from founder Braam van Huyssteen and former executive in exchange for Steinhoff shares.

Steinhoff has made €943 million (R16 billion) available in a form of proposed settlement against the claimants, which also includes former Tekkie Town executives.

“Steinhoff will oppose the application by the Tekkie Town claimants and will vigorously defend any attempt to disrupt the proposed global settlement and the company’s ongoing Dutch suspension of payments and the proper forum of the Dutch courts.

“The global settlement proposal currently under consideration by the Dutch court incorporates provisions to address the disputed claims of the Tekkie Town claimants against the company which relate to transactions between the Tekkie Town claimants and the company in 2016,” Steinhoff said yesterday.

However, former Tekkie Town chief executive Bernard Mostert has claimed that the settlement proposal put forward by Steinhoff puts them at a disadvantaged position.

“The proposed settlement proposal is complex and very complicated as it requires us to accept a settlement that we are not satisfied with. If we accept the proposal we can no longer go back and claim against Steinhoff or against any of its subsidiaries.

“In terms of the proposed settlement we stand to get around R110m, which is way less than what the business was worth,” Mostert said.

He added that Steinhoff was unable to pay its debts and its liabilities exceeded its assets by such a margin that Steinhoff has lost more than 75 percent of its share capital.

According to the court papers, the former executives, who have launched various court cases over the years, have put forward a claim of R1.86bn against Steinhoff, stating that they were fraudulently induced to conclude the contract in 2016.

Koos Benadie, a director at Barnard Incorporated Attorneys, said if a settlement agreement was accepted by all parties and the agreement makes provision that no liquidation application may be launched, the parties to the agreement would be barred from proceeding with the application.

“Tekkie Town is free to proceed with the liquidation application as there is no final agreement and in any event they are not in agreement with the terms of the proposed settlement agreement.

“The mere fact that there are settlement negotiations will not bar a party to proceed with a liquidation application,” Benadie said.

He added that Steinhoff’s approach would be that the settlement offer was to the benefit of the creditors and that Tekkie Town’s conduct was malicious and to the detriment of all other creditors.

“This is merely a defence to be considered by a competent court but does not prevent the liquidation application,” Benadie added.