SHAKE-UP Two schemes’ money missing?
CONCERNS: LIQUIDATION BID, INTEREST PAYOUTS STOP
The prospects of investors getting cash back are uncertain.
Etienne de Beer, but supported by the other, Willem van der Vyver.
Litigation
The investor has applied for the company’s liquidation on the basis that it could not pay its debts and was “factually insolvent”. In his responding affidavit, De Beer argued the company was solvent. He said it could not honour the withdrawal request because of cash flow constraints due to its business model.
De Beer’s affidavit
De Beer claimed MSF has a R15.4 million debtors loan book. The interest was what was paid to its investors, who were actually the company’s creditors, since their investment is in the form of loans to it. The loan book is secured by R13.9 million in mortgage bonds, but the bonds are held over only 80% of the value of the properties. There’s therefore an additional 20% security, of R2.8 million .
The mortgaged properties have “a collective sworn valuation” of R20.6 million based on valuations between 2010 and 2015. The amount should thus be higher. According to De Beer, the company owed R15.7 million to investors so assets exceeded liabilities. Monthly interest received was R238 758. Interest paid, according to his court papers, was R193 750.
Contradictions
These figures did not tally with the company’s bank statements. A Moneyweb analysis revealed that from March to August this year, the interest paid to investors monthly was substantially greater than the interest received. Of greater concern was that even at the lowest rate of interest the company claimed to pay (11.5%), R345 768 represented monthly interest on R36 million. This was more than twice the amount invested via the company and well above what its loan book covers.
Loxfin Trade Finance
MSF’s bank statements also revealed that in this six-month period over R1 million was paid to Loxfin Trade Finance, a company also run by De Beer.
It was paid out as interest. The funds inflow stopped on June 6 and and Loxfin stopped interest payments at month-end. There appeared to be no legitimate reason for the money to have been paid to Loxfin. De Beer declined to comment.