The liquidators of the Bosasa group of companies were provided with the necessary power of attorney or authority to sell the assets of the six Bosasa companies in a public auction in December 2019.
That was the finding of the Supreme Court of Appeals on Tuesday while upholding an appeal by the liquidators of the Bosasa group of companies, now known as African Global Holdings.
The directors of African Global Holdings and two Bosasa companies – Sun Worx and Kgwerano Financial Services – went to court in December 2019 to stop the sale of Bosasa’s assets, which took place December 4-6, 2019, by public auction.
The Johannesburg Supreme Court ruled in favor of its directors in the August 2020.
It found that the liquidators were legally prevented from proceeding with the auction and any subsequent sales of the Bosasa assets
The High Court ruled that the business res The cue motion triggered the stay of the Bosasa’s respective winding-up proceedings – Companies within the meaning of the Companies Act. It also declared all auctions illegal and prohibited the transfer of property as a result of the auction.
The bankruptcy trustees appealed these orders.
Bosasa’s troubles began as revelations during the state Commission of Inquiry, including by Bosasa’s former COO Angelo Agrizzi, into how Bosasa conquered the state.
A commission report revealed how this company, which works for government agencies such as correctional services, home affairs , education and transport – and amassed more than R2.3 billion in government contracts over a decade – also paid some sort of illegal tax for the work.
The revelations prompted bankers at African Global Operations to boast that they would withdraw the company’s banking facilities and close the bank accounts.
The directors of African Global Holdings decided early 2019 to place Operations and its 10 wholly owned subsidiaries and voluntary liquidation as no other bankers were willing to work with the companies.
In November 2019, the Bosasa companies remained in a voluntary liquidation of creditors .
Despite this state of affairs, Holdings requested that the liquidators not proceed with the auction.
When the liquidators refused to comply with their request, Holdings, Sun Worx and Kgwerano arranged for the Issuance of the application for corporate recovery.
The auction began and the sale of most of the assets of the six Bosasa companies totaled R113 million, in circumstances where the estimated market value of the forced sale of the realized assets was 89 Million Rand.
In the judgment announced on Tuesday, the SCA said the question was whether the application for corporate restructuring was actually in the sense of the Companies Act, suspending the winding-up proceedings prior to the auction.
“The answer is no,” said Appeals Judge Pieter Meyer in the ruling.
The court stated that on December 3, 2019, the sheriff only served it on Cloete Murray, and a candidate attorney personally served it on Ralph Lutchman, who are joint liquidators of all six Bosasa corporations.
“The sheriff has it not served on the many other joint liquidators,” Meyer said.
He said the auction filing and corporate reorganization filing had to be served on each of the joint liquidators of each of the six Bosasa companies.