Pens a letter to the Chief Justice of the Supreme Court of Appeal for a review of her dismissed application to provisionally liquidate the company.
The investor in financially distressed Ecsponent who unsuccessfully attempted to provisionally liquidate the previously JSE-listed company has not thrown in the towel yet. Her fight to find out what happened to the R2.3 billion invested in preference shares in the company continues.
Jienie-Michelle Dreyer has now sent a letter of dispute on a petition to appeal to the Chief Justice of the Supreme Court of Appeal in Bloemfontein to give notice that she intends to apply to the court to review the case on the grounds of “grave failures of justice” and against the whole judgment and orders of Judge G Ally.
This follows Judge Ally on 20 February 2024 dismissing her application to provisionally liquidate Afristrat and on 26 May dismissing her application for leave to appeal his judgment, and the Supreme Court of Appeal ruling on 11 November 2024 not to entertain her petition for leave to appeal the judgment.
Dreyer said on Tuesday that she has not yet received a response to her letter, adding that she is in dire financial straits and is unable to obtain a legal team.
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Liquidation applications
Ecsponent, which was renamed Afristrat Investment Holdings, had its listing on the main board of the JSE removed on 1 July 2024 following the suspension of trading in the company’s shares on 5 August 2022 because of its failure to publish its audited financial statements.
Despite opposing Dreyer’s application, Afristrat’s board decided on 1 March 2024 to voluntarily liquidate the company because it is commercially insolvent.
Afristrat was unable to proceed with its liquidation application because Dreyer’s application to provisionally liquidate the company took precedence.
Dreyer claims in the letter to the Chief Justice that an injustice has been committed and stresses that her application was for the “urgent liquidation” of Afristrat and not how the investments were lost.
She claimed Judge Ally erred in finding that the test in her application for leave to appeal has changed in every instance to one where she is required to convince the court that another court “would” come to another conclusion as well as omitting the possibility altogether that there exists some other compelling reason why an appeal should be heard.
Dreyer believes the whole matter should have been reconsidered by a fresh pair of eyes and criticises the fact that reasons were not provided for dismissing her attempts to appeal the judgment.
“The fact the Learned Judge Ally cannot document any legal reasons for his decision not [nor] can the judges that denied the petition to appeal give valid legal reasons for their decision is not only in bad taste, it leaves more conjecture as to the respect afforded to the normal citizens of South Africa,” she said.
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Background
Dreyer’s various court applications follow her acquisition of R6.5 million preference shares in Afristrat through an independent financial broker/advisor on 13 September 2015 and 1 June 2016.
Afristrat in September 2019 invested more than R2 billion of investors’ money in the MyBucks Group, which was listed on the Luxembourg Stock Exchange and a microlender in several southern African countries.
Afristrat CEO George Manyere previously told Moneyweb that almost 90% of Ecsponent or Afristrat’s investment funds were invested in MyBucks, either as equity or as loans, and all that money was lost when MyBucks collapsed.
The MyBucks Group has been liquidated and is being wound up.
Dreyer said in the letter that Afristrat represented itself to be solvent through the publication of its financial statements and, therefore, launched her application in terms of Section 81 (1) (e) (i) and (ii) of the Companies Act on the grounds that “the company’s assets are being misapplied or wasted”.
She said the court, which heard her liquidation application correctly, found that Section 81(1) did apply because Afristrat had publicly represented itself to be solvent.
Dreyer said the crisp issue upon which her appeal will turn is where Judge Ally erred in accepting Afristrat’s submissions that the point at which an investment is assessed “is at its inception and that such investment cannot be assessed during its currency or its result when determining wasteful or misapplied assets”.
She stressed that she had no voting powers, no say within the company, and could not withdraw her capital.
“The applicant [Dreyer] herewith requests a fair legal response on what grounds was the petition [to appeal] denied,” she said.
Lost investments
Dreyer added that Afristrat accepted that continuing investment losses were incurred, which, according to the audited financial statements of MyBucks, were:
- 2016: R11.9 million loss
- 2017: R221.2 million loss
- 2018: R163.4 million loss
- June 2019: R79.5 million loss.
However, Dreyer said Afristrat continued to invest in MyBucks after the publication on 19 October 2019 of a PricewaterhouseCoopers (PWC) report that stated that MyBucks, as a going concern, breached covenants of certain debt facilities, which cast significant doubt on the group’s ability to continue as a going concern. Afristrat subsequently applied sums of R450 million and R1.671 billion in goodwill to this investment.
“It is common cause such funds were all lost,” she said.
Dreyer further questioned how the court determined that Afristrat had not misapplied assets when, in the same month of the company’s “default in honouring their agreement to their investors”, it was able to provide ECS Financial Holdings, a shelf company that had been incorporated for less than 20 days, had no assets or staff, with an unsecured loan of more than R626 million, plus a further loan of more than R400 million over a one-year period, all of which was lost.
She said a further instance of wasted or misapplied assets by Afristrat was the investment of R100 million into VSS Financial Services (Pty) Ltd, which, prior to such investment, had a reported audited net loss of R17 million.
These funds were also all lost, she said.
Sale of subsidiaries
Dreyer added that a number of wholly-owned or majority-owned subsidiaries, which had significant value to Afristrat, had remarkably been sold to George Manyere, one of the current directors, for R1.
She said subsidiaries disposed of in this manner were:
- Ecsponent Business Credit, which in the year to end-March 2020 had an income of R46 071 000 and liabilities of R10 538 000;
- Eswatini-domiciled companies, which in the year to end-March 2020 had income of R347 523 000 and liabilities of R325 578 000; and
- Ecsponent Swaziland (Ecsponent Limited), formerly Escalator Capital Limited, which in the year to end-March 2020 reflected a profit of R842 843.
Dreyer said that in the judgment to her application for the provisional liquidation of Afristrat, Judge Ally did not deal with any of these submissions at all and simply stated he was not convinced another court would come to a different conclusion.
“As such, the applicant [Dreyer] is hard pressed to set out further submissions concerning the judgment as there are no reasons the Learned Judge advanced save for his conclusion.
“It is respectfully submitted that the Learned Judge ought to have provided such reasons, not the least of which is it is in the interests of fairness to do so.
“Finally, it is submitted that it is in the interests of justice that an appeal hearing is allowed as contemplated in Section 17(1)(a)(i) and (ii) of the Superior Courts Act 10 of 2013,” she said.
This article was republished from Moneyweb. Read the original here.
