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Friday May 11, 2012

Mandela Rhodes 'to operate as usual', despite West City final liquidation order

The company that owns most of flagship Cape Town development Mandela Rhodes Place has been wound up as it is over R219 million in debt.

Judge Siraj Desai granted a final liquidation order in the Western Cape High Court yesterday.

This comes three weeks after West City Precinct Properties - which owns a significant number of the building's sectional title flats, as well as the commercial space and parking lot - was provisionally wound up.

The company is now in the hands of liquidators, who are expected to sell off its assets.

However, Frank Gormley, the majority shareholder in West City and the man behind Irish-south African developer Eurocape (which acts as a service provider to Mandela Rhodes Place), has said that he had been assured that there were no imminent auctions or forced sales.

"There will be no urgency to sell. Why would you sell an asset that's doing so well?" said Gormley, adding that Mandela Rhodes Place's profits were up 56 percent from last year. "Mandela Rhodes Place will continue to operate as usual. West City Precincts has been liquidated but there are loads of owners. I spent nine years of my life building up that place. It's brought life back into that part (of the city centre); it has a life of its own," he said.

The liquidation application was brought by Anglo Irish Bank Corporation, which itself is reportedly under liquidation.

Gormley earlier tried to save West City by asking the court for a business rescue plan in terms of the Companies Act. However, Deputy Judge President Jeanette Traverso dismissed this application when she placed the company under provisional liquidation.

According to her judgment, the company was unable to pay its debts since April 2008.

The bank also alleged in papers submitted to the court that West City showed a loss of R7.8 million for the 2010 financial year and R20m in 2009. The company had also stopped paying its monthly R500 000 instalments to the bank in August, 2010.

In the meantime, the bank has lodged another court application for Gormley to be placed under provisional sequestration.

This matter has yet to be heard and is set down for August.

Cape Times

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