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Cohen resigns as Orthotouch receiver amid physical threats

Says it is impossible to ensure implementation of the scheme of arrangement in the current environment.

Derek Cohen, the receiver of the Orthotouch investment scheme, has resigned citing among other reasons a “potential risk” to himself and his family due to campaigns waged by “certain investor” groups.

This step may have far-reaching implications for the 18 000 Orthotouch investors and will blur the current uncertain situation related to interest payments to investors and the various legal challenges against property magnate Nic Georgiou and Orthotouch even further.

“It appears that there is a potential risk to my family and myself as a result of the unfair and inaccurate character assassination and vilification campaigns by certain investor groups, which may have caused aggression by certain of their members towards me. I know this is hearsay, but I cannot afford to take any risk in this regard,” Cohen said without identifying the investor groups.

He did add that “for example, one group made a statement to the effect that I had stolen the investors’ funds placed in a trust. Not only is it patently untrue but inflammatory. I have been advised that this constitutes a potential risk to me and my family because one doesn’t have to be Einstein to assess the potential risks.” 

Moneyweb put questions to Georgiou regarding Cohen’s resignation but did not receive a response.

Cohen also stated that his office was broken into on Tuesday night.

Tension

The resignation follows several turbulent months and escalated tension. It began when Georgiou withdrew his appeal application in the Supreme Court of Appeal in May against several harsh judgments against him. This paved the way for the Highveld Syndication Action Group (HSAG) to proceed with its application for a class action certification and the rescission of the Scheme of Arrangement.

Advocate Louis Bolt also applied for the liquidation of Zephan, the underwriter of the scheme responsible for the monthly interest payments, after winning several judgments against Georgiou on behalf of individual clients.

Zephan then announced the suspension of monthly interest payments to investors who support any of the legal challenges. This decision was made without any apparent consultation with Cohen.

Cohen, as the receiver, was tasked with ensuring that all payments to investors were made in terms of scheme conditions, intervened and demanded that the interest due to these investors be paid into an independent trust account under his control to ensure continued compliance of the scheme conditions.

However, things took a turn for the worse last week when Cohen became aware that the interest payments to around 4 500 investors who did not complete an official form circulated by Zephan to indicate whether they support for the legal actions or not, were withheld.

These investors are nearly half of the approximately 11 000 investors who are entitled to monthly interest payments.

Cohen then instructed his legal team to apply for a court order to compel Zephan to adhere to the scheme’s payment conditions.

Impossible to implement

In response to Moneyweb’s questions, Cohen described how these developments created an untenable situation. “It is impossible to implement the scheme when, on the one hand, the financial proposer is reluctant to pay monthly interest to those who are litigating against the scheme or parties to the scheme and, on the other hand, the litigation continues ad infinitum. This created an atmosphere, which does not allow the receiver to implement the scheme per the agreement. I cannot condone or agree with the decision by Zephan to withhold the July interest payment of 4 500 investors arbitrarily.”

New receiver

Cohen said the parties to the scheme of arrangement will now have to nominate and appoint a new receiver. It is not certain how long this process will take.

Neither Jacques Theron of Theron and Partners, representing the HSAG, nor Advocate Louis Bolt were formally informed of Cohen’s resignation. Cohen will be distributing a circular to investors in this regard soon.

Georgiou’s letter to investors

Following the publication of this article, Moneyweb was made aware that Georgiou sent a letter to some investors. The letter, sent on a Zephan letterhead, states:

Dear Investor,

“Pursuant to enquiries received of non-payment of interest, we investigated the matter and certain Investors weren’t paid.

“Steps are being taken to address the situation and payment will be forthcoming shortly. 

We thank you for your patience and understanding.

Yours truly,

Nicolas Georgiou

Director

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South Africa’s thug-culture is a disgrace.

Just a few thousand pensioners begging for their hard earned money and by using the word “stolen” this is regarded as a threat to life!!!! Most over 70 years old —-

These developments plays favorably into the hands of Nic Georgiou the Greek and his Zephan trust. The mess just became messier. It has become time that the court be approached by the HSAG to appoint an independent bookkeeping firm to act on behalf of the 18 000 investors all effected by this mess.

Ryk. Wow! For another wonderful article about Highveld Syndication/Pickvest/ORTHOTOUCH. Well who would have thought that Mr. DP Cohen would jump ship so quickly after he got a bit of pressure from us the investor’s, whose interest has been held back and would not bow to the pressure that was put on us to sign our rights away again!! What’s happening Mr. Cohen? Not so long ago you told us via a news letter that it ‘WAS PARTLY DUE TO YOU’ that we got our interest for May on the 7th of June 2018 after struggling for months getting it on time (as if you did not know that). I actually think it was because of all the publicity from Moneyweb, RSG, Die Volksblad and Rapport about this saga (which some of us investor’s instigated)that made you come out of your comfort zone since 2015 ~just my opinion~ as that letter in which you bragged so much was the first letter since 2015 that you as the “then” Receiver has ever emailed to us. What happened to the meetings, financial statements, updates about our case which we never received since 2015. Neglected your duties Mr. DP Cohen!! Please provide us with the Court date as to when you were supposed to take NG/ORTHOTOUCH to Court as you stated that they were in CONTEMPT or was that also just a ploy? Are the pressure from the lawyers Theron and Partners too much? Who will be next to jump this ship?

Derek has been caught between a rock and a hard place – I wonder who was paying his salary – you cannot bite the hand that feeds you – perhaps he was fired??!!!

Cohen now you are also jumping the ship and leaving investors in the cold. You knew that this plan was not sustainable from the start Maybe you are scared your reputation is on the line therefore the “resignation ” Now letters are being sent to calm investors regarding payments which is most probably another unfulfilled promise Interesting events Hopefully banks and judges are NOW fully aware of this blazing fire

Regardless of this letter from N Gerogiou where in he states he will address the matter and investigate and payment will be forthcoming…….well a call to Orthotouch today confirmed that this is not the case as anyone litigating against him will NOT BE PAID INTEREST!!!! Nice man ………………..

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