Steinhoff loses new court bid
Steinhoff has lost its ambitious bid to consolidate 12 South African-based claims that have been lodged against it, following the collapse of its share price in the wake of news of accounting irregularities reported in December 2017.
The loss comes with a hefty legal bill estimated to be as much as R60 million; the judge ruled that the international retail group must pay the costs of all the parties and that such costs would include the costs of three counsel.
“I am satisfied that [given] the volume of the papers in the record and the importance of the matter to the parties, the employment of [three] counsel is justified,” said Judge Nape Dolamo, announcing the dismissal of Steinhoff’s application last week.
The parties involved in the cases that Steinhoff attempted to consolidate have lodged claims of over R80 billion.
Much of that is down to former chairperson and controlling shareholder Christo Wiese’s R59 billion claim. PIC-banked Lancaster is claiming R11 billion, former banker GT Ferreira is claiming R1.2 billion and Tekkie Town-related entities are claiming R1.8 billion.
In the court papers Ferreira argued the cases could not be consolidated because of the extensive disparities among the claims: “A bumper trial will inevitably entail the incurring of unnecessary delay and legal costs in relation [to] litigation.”
Many of the claimants believe the attempt at consolidation was a delaying tactic aimed at securing the interests of Steinhoff’s creditors who signed up to the company voluntary arrangement last August. A court-backed order to pay out any successful claimant could trigger Steinhoff’s liquidation to the disadvantage of the creditors.
The creditors, who owned claims of around €9 billion (R188 billion) of debt, agreed to roll over the debt until at least December 2021. In exchange they will receive annualised interest of 10%, which will be capitalised.
Unlike the SA claimants, the creditors are represented on the Steinhoff board.
In his judgment Dolamo said the purpose of consolidation actions “is to have issues, which are substantially similar tried at a single hearing so as to avoid the disadvantage attendant on a multiplicity of trials”.
Steinhoff chief executive Louis du Preez said the company respects Dolamo’s ruling and accepts that the judgment may require each action to progress individually.