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Wednesday Nov 16, 2011

Charges may await directors of failed Pinnacle Point property group

Pinnacle Point Group's directors and former directors may face prosecution following the liquidation of the leisure property group and its subsidiaries earlier this month.

Cape Point Vineyards, which was part of the application for the liquidation of the group, wants an investigation into the affairs of all the directors and their subsequent prosecution if any wrongdoing is discovered.

The wine estate, which owns 1 percent of Pinnacle, said there was no way the property group could be rescued as it was seriously insolvent.

"There's nothing that one could have done, the group is irretrievably insolvent. We want an article 417/418 inquiry into the affairs of the directors and previous director. They should be prosecuted," Cape Point Vineyards owner Sybrand van der Spuy said.

Pinnacle Point was placed in final liquidation on November 4 after six of its subsidiaries were liquidated earlier in the month. Investec is a major creditor of the subsidiaries.

The subsidiaries - Pinnacle Point Resorts, Pinnacle Point Investments, Clarens Golf and Trout Estate, Property Promotions and Management, Eagle Creek Investments 74 and Festival Bay Trading 55 - were liquidated through a court order granted by the Western Cape High Court on November 2.

The listed holding company, Pinnacle Point Group, was liquidated following an application by Cape Point Vineyards.

Investec applied for the liquidation of the subsidiaries to recover amounts owed to the bank, arguing that Pinnacle Point subsidiaries and the holding group were commercially insolvent. Investec said the group owed it R120 million.

The bank initially submitted the liquidation application in February. The subsidiaries were placed under provisional liquidation in August.

Investec lawyers from Edward Nathan Sonnenbergs said the final orders were granted on an unopposed basis. The holding group's final liquidation at the instance of Cape Point Vineyards was also granted on an unopposed basis.

"Now that the companies have been placed into final liquidation, the liquidators are obliged to realise the assets in consultation with creditors. Investec is the major secured creditor... of the subsidiaries," lawyer Lisa Melis said.

"It is unclear what portion of Investec's claim will be settled by way of the realisation of the subsidiaries' assets."

Melis said the liquidators of the holding group had now instructed the law firm to assist with the winding up of the group, which would include an inquiry into its affairs in terms of the Companies Act.

Pinnacle Point had lodged six separate business rescue applications under the new bankruptcy protection provisions of the new act in July.

The firm lodged another host of applications during the hearing of its provisional liquidation in August.

Lawyer Leonard Katz asked the court to disregard these applications as they were a "complete abuse" of proceedings.

The applications were all removed, unprocessed, from the court roll shortly after provisional liquidation orders were granted.

In May, Pinnacle Point said it had secured the amount it owed Investec through the sale of its Pinnacle Point Resort.

The group said it had finalised a deal with Veritable Investments and Raptoguard to sell the golf and beach resort for R75m. At the time, Pinnacle Point said it owed Investec only R58m.

Pinnacle Point shares have been suspended by the JSE.

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