Absa, Wooltru halt legal action on CNA
June 11, 2003
By Ann Crotty
Johannesburg - Absa and Wooltru have prevented the liquidators of CNA from instituting legal action to set aside a number of highly controversial transactions undertaken in the months leading up to CNA's liquidation.
The liquidators are now investigating what steps can be taken following the blocking by Absa and Wooltru of resolutions at a general meeting of CNA creditors yesterday.
The resolutions - the outcome of the liquidators' prolonged investigations - included the recommendations of the 417 inquiry last year.
In terms of the resolutions, Wooltru would be required to repay the R85 million it received from MTN following the restructuring of a retailer agreement between CNA and the cellphone service.
Absa would be required to repay some R20 million it collected from CNA between July 15 and 27 2002, when CNA was put into provisional liquidation. And CTP would be required to repay the R3.9 million it received from Absa on behalf of Consolidated News Agency after July 15 2002.
As creditors of CNA, both Absa and Wooltru were entitled to vote on the resolutions
. The fact that they voted against them was sufficient to block the resolutions. CTP voted in support of the resolutions.
The resolutions included the intention to issue summons against Wooltru executive director John Newton to recover R85 million, and sought an interdict to prevent Wooltru from unbundling before the CNA liquidation process was completed.
In addition, one of the resolutions attempted to set aside the payment of R500 000 to Absa under common law on the basis of a possible breach of contract.
This was the amount Absa charged for providing extended overdraft facilities to CNA for 10 days before it was put into liquidation.
In February 2001 Wooltru sold CNA to Gordon Kay and Associates for R192 million.
Last year's 417 inquiry heard how R122 million of that sum was paid out of CNA's own cash flow and a further R85 million was paid, in terms of a restructured agreement, by MTN to Wooltru.
CNA's liquidators have argued that the R85 million was owed to CNA in terms of retail facilities provided by CNA to MTN.
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