Former VR Laser workers fight payment to Bank of Baroda
The winding down of the Gupta family’s company, VR Laser, was halted again this week when former employees petitioned the business rescue practitioners to stop a R29 million payment to Bank of Baroda.
The money was raised at a recent auction of VR Laser’s equipment, but the amount is not nearly enough to cover claims against the company, which was one of eight Gupta companies that voluntarily went into business rescue this year.
Bank of Baroda is the only secured creditor and has a claim of R33 million against VR Laser.
Former employees, however, collectively have a recognised claim of roughly R35 million for unpaid salaries and separation packages.
A campaign by former employees was launched last week to stop the payout to Bank of Baroda based on the argument that their claim outranked that of the bank.
This sets the scene for yet another legal challenge in the drawn-out saga of the demise of the Gupta family’s companies.
Rescue practitioner Kurt Knoop wrote to interested parties saying that the rescue practitioners “are therefore not in a position to release any funds until the impasse is either resolved in writing between the employees and the Bank of Baroda, or if a declaratory order is received”.
Knoop’s fellow rescue practitioner this week confirmed that the payout to Baroda was on hold.
In an email to the rescue practitioners last week, Oakbay Group’s HR director André Oldknow said that there was a “growing groundswell” of former VR Laser employees who wanted to challenge the ranking of Bank of Baroda’s claim above their own.
Their argument is that the unpaid salaries and packages are tantamount to post-commencement finance. In a business rescue, any funding provided to the distressed company after business rescue has commenced is automatically the highest priority for repayment.
It is possible that the auction money will be the last substantial income for VR Laser’s creditors. There are claims against Denel for roughly R40 million, but the state-owned weapons company has already gone to court to challenge these debts on the basis that its contracts with the Gupta company were irregular and illegal.