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Wednesday May 16, 2012

Outraged investors say Cotswold Downs could be rescued

Keith Wakefield and his fellow directors in the financially ailing Cotswold Downs Development Company will never face an interrogation over what went wrong and what happened to investors' money.

That is if the Durban High Court next week approves a "business rescue plan" which will put an end to attempts to liquidate the company and two associated companies, Cotswold Lakes and Fischer Road Water Service Provider.

A rescue plan is on the cards for Cotswold Downs.

Instead, as a creditor, Wakefield will benefit from the plan - which will enable the companies to trade themselves out of trouble - and his estate agency will also possibly score through the sales of hundreds of vacant sites on the upmarket Hillcrest golf estate.

The rescue plan - which got the nod of all creditors at a meeting on Monday - is based on legislation seldom used and will see the appointment of attorney Pierre de Villiers Berrangé as a "receiver" who will be tasked, over three years, with putting the group back on a firm financial footing, which will include the sale of about 240 vacant sites.

A liquidation expert, who did not wish to be named, said the "compromise" plan was probably the best option for the estate and those who owned and lived there. He said it was not often that creditors agreed to use this section of the Companies Act, which involved a debt moratorium.

KBut not everyone is happy, and some creditors still want to know what happened to their money. These include some of the 100 "option holders" - people who invested money in the development company in return for a right of first refusal on a particular site. They were not able to take transfer because the company owed money in rates and VAT.

After the company was placed under provisional liquidation in February 2011 by Firstrand Bank - which was owed R40 million at the time - they were collectively owed R84m.

After a first meeting of creditors, they were given an option to take transfer of their sites, but only if they each paid a further R203 000 for back rates and levies. According to a press release issued by Berrangé this week, 83 people took this deal.

The others, he said, could now accept a dividend of between 10c and 12c in the rand, or they could wait three years until all the vacant sites were sold and possibly get more money, "although there is no guarantee".

Ryno Eksteen, who took the deal, said he sold the site he bought for R650 000 for "next to nothing".

"I have walked away. I could not face driving through those gates every day knowing I had been done in."

Bernice Horne, who also took the deal, said she sold the site she bought for R741 000 for only R200 000 and had "lost (her) pension".

"I spit every time I drive past," she said.

Another option holder, who could not afford the deal, said: "I wanted the company to be liquidated. I wanted the directors questioned."

Soon after Firstrand Bank brought the liquidation proceedings, Wakefield, through another company, bought the debt and ceded it to Investec, another major creditor in Cotswold Downs.

Berrangé said Investec had been the driving force behind the compromise decision.

He said with the court's sanction he would now oversee the construction of the clubhouse and leisure centre, run the golf course, continue with the sewage and water works business and sell the sites.

The Mercury

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