Steinhoff weighs next move
Embattled furniture retailer Steinhoff is facing a new challenge to its attempts to strengthen its balance sheet, with former business partner Andreas Seifert opposing an agreement reached with creditors in December 2018.
The deal, referred to as a company voluntary arrangement (CVA), was reached with and approved by an overwhelming majority of creditors in December and two Steinhoff subsidiaries, Steinhoff Europe AG (SEAG), and Steinhoff Finance Holding Gmbh (SFHG).
The implementation of the CVA would now be delayed until the application brought by LSW, a German entity associated with Seifert, had been resolved, Steinhoff said in a statement on Friday.
CVAs allow financially distressed businesses to come to an agreement under UK law with creditors, often by negotiating more favourable lease agreements and allowing some outlets to close before leases expire. Markus Jooste, Steinhoff’s former CEO, told parliament in September 2018 that the group’s near-collapse had originated from a protracted dispute with Seifert.
The legal battle, mainly over the valuation and ownership of German furniture chain Poco, led to investigations by European regulators and tax authorities that attracted the attention of Steinhoff’s auditors at Deloitte.
Jooste resigned in December 2017 after Steinhoff’s board disagreed with his plan to replace the auditors and publish unaudited financial results.
His resignation, along with an acknowledgment of accounting irregularities, triggered a collapse in Steinhoff’s share price, wiping more than R200bn off the company’s market value.
On Friday, Steinhoff told Daily Dispatch sister paper Business Day that the CVA still stood, together with the moratorium on creditor action.
"We and our advisers need to review the substance to the challenge and assess the next steps and likely timing implications. We will press to have the matter resolved as soon as possible," it said.
Attempts to reach LSW for comment were unsuccessful.
Seifert is also still embroiled in litigation with Steinhoff on other issues.
He is suing subsidiaries AIH Investment Holding AG and SEAG for à249m (R3.9bn) plus interest and costs. This is in respect of an outstanding portion of a à300m (R4.8bn) loan advanced by Seifert in 2011.