RAG liquidation dividend to McCarthy not according
RAG liquidation dividend to McCarthy not according to law, says liquidator
March 15, 2004
By Margie Inggs
Durban - Evidence at the Retail Apparel Group (RAG) inquiry strongly suggested that the R106 million interim liquidation dividend paid to McCarthy outside of normal procedures fell foul of the provisions of the Insolvency Act, Enver Motala, the lead liquidator, said at the weekend.
The guarantee from FirstRand was called up on Friday following the judgment by Judge Peter Combrink in the Durban high court that McCarthy was not entitled to the money until the finalisation of the secured claims, which is still expected to take many months.
Not until the secured claims have been finalised will it be clear if those lodged by McCarthy and the banks have been validated.
Motala said the R106 million, a purported secured claim for McCarthy's convertible debentures, would be set aside and expunged if found to have fallen foul of the act.
The secured claims lodged by McCarthy amounted to R200 million and the banks' claim totalled R160 million.
Motala said the interim liquidation dividend had been paid without his consent, while he was holidaying in Hermanus.
Responding to claims that the payment had been made with the consent of his attorney, Stan Rothbart, Motala said this had been subject to his approval, which had not been given.
All the interim dividends were initially recalled in September 2002 after Motala's appointment as lead joint liquidator, as the payments had been made without court approval.
Subsequent to the payments being authorised, trade creditors were immediately reimbursed but McCarthy had to battle for its repayment, which was rushed through as the banks were about to close on New Year's Eve.
The entire section 417 inquiry has been embroiled in controversy, which has included claims that the liquidators unprocedurally claimed R27 million in fees.
However, Leon Lategan, the director of insolvencies of the master of the Pretoria high court, under whose jurisdiction the RAG case falls, confirmed that he had approved 60 percent of the payment in terms of the Companies Act and that the rest had not been paid.
The original letter of guarantee from FirstRand, required in terms of recalling McCarthy's interim liquidation dividend, was urgently couriered from Pietermartizburg to Johannesburg on Friday afternoon and presented at Bank City at the 11th hour.
Motala had threatened to take legal action against FirstRand should the amount not be repaid by Saturday morning.
Motala said trade creditors with reservation of ownership claims amounting to R38.7 million had already been paid.
He welcomed the court ruling.
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