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Georgiou puts Orthotouch and Zephan into business rescue

Class action certification hearing starts on Monday.

Just days before property magnate Nic Georgiou and the Highveld Syndication Action Group (HSAG) were set to square off in the North Gauteng High Court, it emerged that Georgiou put Orthotouch and Zephan into business rescue.

Georgiou, the owner and only director of the companies, filed documentation with the Companies and Intellectual Property Commission (CIPC) last week, stating that both companies are “financially distressed”, without providing any significant details about its financial problems. 

He did, however, reveal that Orthotouch and Zephan are indebted to the tune of R5.4 billion and R2.4 billion respectively. 

However, Windeed reports suggest that these companies own hardly any property assets.

It does not seem that Georgiou, Orthotouch or Hans Klopper, the business rescue practitioner of the HS companies, have informed investors that Orthotouch has been put in business rescue.

For the full background regarding the history of the HS companies, read the following articles:

The peculiar case of the Picvest billions (Part 1) (Background)

The peculiar case of the Picvest billions (Part 2) (Background)

The peculiar case of the Picvest billions (Part 3) (Overvaluation of properties)

The peculiar case of the Picvest billions (Part 4) (Property transactions prior to HS companies being put into business rescue)

The peculiar case of the Picvest billions (Part 5) (Disposal of properties contradicts the intent of the business rescue plan)

The peculiar case of the Picvest billions: Part 6 (The murky sale of 31 ‘Orthotouch Properties’ to Accelerate)

Orthotouch and Zephan

The financial problems at Orthotouch are extremely concerning, as the company was set up by a Section 155 scheme of arrangement as the rescue vehicle for the failed HS companies. Orthotouch was hailed as the only hope for the 18 700 investors to recover the R4.6 billion they invested in the schemes.

This scheme was never implemented, as not one of the 79 former HS properties was transferred to Orthotouch. They were all sold to third parties. The extent of Orthotouch’s financial problems was also never disclosed to investors, as its financial statements were never made public.

The other company Georgiou put into business rescue is Zephan. It used to house Georgiou’s extensive property portfolio, and was also the underwriter of the scheme of arrangement. A Windeed report shows that while Zephan once owned more than 150 properties, there has been a significant sell-off and only five remain on its books today.

Georgiou affidavits

Georgiou says in his submission to CIPC that the Orthotouch board decided to put the company into business rescue on November 7.

“As director I investigated the Company’s affairs and concluded that the Company is ‘financially distressed’ as defined in section 128 of the Act as it is reasonably unlikely to be able to pay all its debts as they become due and payable within the immediately ensuing six months and/or the Company is reasonably likely to become insolvent within the immediately ensuing six months.

“According to records provided to me and to the best of my belief, the Company is indebted to its creditors in an amount of R5.4 billion. It is difficult to confine to an amount in light of various claims which have been made by various parties. In various litigious matter proceeded with against the Company. This number is therefore subject to substantial verification and adjustments.”

Georgiou did not provide any information regarding the identity of the various creditors. 

Georgiou added that “the Company requires time in order to restructure its affairs, debt and equity so that the creditors of the Company are afforded maximum benefit”.

“Funding from sources such as shareholder loans [entities linked to Georgiou himself] and loans [from] the Company’s financiers has ceased or is about to cease. The Company is faced with the situation where it needs to realise its assets or to procure further funding to best effect and to negotiate with its creditors which process will be best achieved under business rescue proceedings as envisaged in terms of the Act.”

Georgiou did not disclose which assets remain in the company. However, a Windeed report shows Orthotouch does not currently own a single property, while a previous Moneyweb investigation revealed that Orthotouch has never taken ownership of any property.

It is not clear what other assets Orthotouch owns to set off against the claimed R5.4 billion of debt.

The affidavit related to Zephan is ostensibly identical to the one related to Orthotouch, although Georgiou claims that Zephan owes creditors R2.4 billion.

HSAG

Jacques Theron of Theron and Partners Attorneys said in response to questions that these developments are “just another attempt to prolong the proceedings”.

“It is not only an abuse of the court process but also of the administration of justice and corporate governance. It is just a further but transparent and desperate attempt by Georgiou to avoid the inevitable certification of a class action, but the HSAG is ready for him and others who benefitted unlawfully from the failed HS companies.”

Theron said these developments should not have any material impact on the class action certification process that started in the Pretoria High Court on Monday.

Moneyweb sent questions to Georgiou and his attorney of record via WhatsApp and email requesting more information, but we did not receive a response before publication.

Moneyweb also asked Klopper, who is also a former director of Orthotouch, for comment, but he did not respond either.

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R7,8 billion owed by the two companies.

The most worrisome feature that hits me between the eyes is that Orthotouch – itself a rescue vehicle to the HS companies – is now in need of formal business rescue.

Unless I am not understanding something, it seems to me that liquidation of both enterprises is a must and that 417 enquiries should follow.

Leave it to Hans Klopper and Connie Myburg – they will turn this into something of value – for them!!!

WOW… When I saw the Headline, I thought this was an April Fool’s Joke!!!
But it’s Mid November.
And I’m not laughing.
1000’s upon 1000’s of elderly peoples lives have been negatively impacted over the last 10 years!

Nic Georgiou, I have a few questions:
Why has it taken 5 years to come up with this new decision? (A few days before the Certification of the Class Action Hearing)
First the HS Companies were put into Business Rescue, that failed and then the SoA 155 was implemented. That doesn’t seem to be working out either?

Oh and lets not forget the cost of defending the on going Litigation by the HSAG.
The question is, why spend 5 years delaying the Registration of a Class Action if everything was above board with Orthotouch and Zephan?
Surely if the HSAG had no case it would just take a few days in court to prove them otherwise?

Liquidation has also been threatened countless times over the last while.

Infact, I have just received an email from the HSBF/HSIF and I quote:

“b. During several meetings between the HSIF and Mr Georgiou to find solutions for this dilemma before it is to late he negotiated as an alternative a deal with a third party for investors to obtain shares in Accelerate Property Fund Limited (“Accelerate”) as a full and final settlement with Orthotouch.”

… and goes on to say;

“d. The HSIF is of the opinion that investors must consider this shares opportunity seriously and preverbal walk away with something in hand instead of possibly nothing at a later stage and avoid possible cost claims by liquidators.”

REALLY… ??????????

Also told in newsletter that if we continue with litigation he will no longer pay us —– well he has not paid for 18 months so what !!!!!!!! Amazing how the website has had a revamp suddenly with letters that we have never even been emailed!!!!!!!

It is great to see that this article is still being shared 10 days later…

TonyBeamish, your comment was spot on- How on earth do you rescue a Company like Orthotouch that has barely any assets left.

The newly appointed Business Rescue Practitioner – JACQUES DU TOIT (of DU TOIT BUSINESS RESCUE in Cape Town) will SURELY DO HIS DUE DILIGENCE AND INVESTIGATE what has happened to all the Buildings over the last 5 years and more before putting a plan into place???

A business Rescue Practitioner has a certain obligation and I quote from info that I found on line:

“THE ROLE OF THE BUSINESS RESCUE PRACTITIONER
If the Practitioner during his/her investigation finds that any of the directors traded recklessly or committed fraud, or contravened any other law relating to the Company, then the Practitioner must  forward the evidence to an appropriate authority for further investigation and possible prosecution.  Apart from this, the Practitioner must also direct the management to take any necessary steps to rectify the matter, including recovering any assets of the Company that may have been misappropriated.”

I also wonder if Jacques Du Toit is aware of the 3rd Party – HSBF/HSIF that are selling Accelerate shares to investors (on behalf of Georgiou/Orthotouch) at less than 10% worth of their original Capital Investment as a full and final Settlement against any original agreement or claim against Georgiou /Orthotouch???

The HSBF/HSIF is Managed by HELGARD HANCKE and he is selling this Share option as a last resort to recoup/salvage what is left of the Investment, but is really a a full and final Settlement against any original agreement or claim against Georgiou /Orthotouch???
What really baffles me is that he is not registered with the FSB and yet he is selling this option as a Financial Advisor would? How is this even legal???

MR JACQUES DU TOIT, I implore you to dig around a bit…

Ryk van Niekerk has uncovered and done a ton of the ground work already and I suggest you read his articles particularly the Series on “The peculiar case of the Picvest billions: Part 1- 6”

Accelerate Property Fund Shares are at an all time low as of: 05th Dec 2019

R1.29!!

Nic Georgiou (Orthotouch /Zephan) and Helgard Hancke (HSBF / HSIF) shame on you for selling these shares as a ‘concrete’ offer to HS Investors – a full and final settlement of their Original Capital Investment!!!

You have valued the shares at R7,50!!

Thank you Ryk for doing Nic Georgiou’s job by notifying us the investors that Orthotouch & Zephyn has been placed under business rescue on the 7th of November 2019. Just a mere 4 days before our HSAG Lawyer’s Theron and Partners are taking Georgiou on in court again. The wheels are falling of for him it seems!! I’m just wondering if this du Toit Business Rescue Practice of Burgandy Estate, way back here in Cape Town really knows what’s been going on with this saga for all these years now? And if they were approached and couched by our dear Hans Klopper the original BRP?
Ryk I have to applaud you for being such a excellent on the money investigative journalist.. Well done once again!!

Can you believe it. Out of the blue Orthotouch are sending letters out to us investors telling us about placing Orthotouch and Zephyn in Business Rescue as well as offering the JSE ACCELERATE as the alpha and Omega for survival. What rubbish!! Accelerate shares today @ R1.90 a share. What a joke!!

Ryk, thanks for this info. Ortotouch was in Business Rescue BEFORE the so-called BRP. Our attorney had noted dispensaries with BRP and had serious, serous reservations about Klopper.

See Google for this guy’s relationship with South Africa’s finance minister.

Ok so Nic and Co are playing their last desperate card THE MAGIC QUESTION THAT WS ASKED MILLIONS OF TIMES : Where is the R4.6 billion that Zephan received from investors ????? He did not pay any bonds of the properties that he sold to the investors and conveniently Accelerate Property Fund whom Michael Georgio Nic’s son are the CEO bought a great part of the buildings for a bargain
So this misery are yelling for an INVESTIGATION !!! THE GEORGIO’S has never ever delivered what they promised and are trying every trick in the book to prevent an investigation! Hopefully the law system will identify this tactic that they have been playing since 2011

Whats the implication for Accelerate Property Fund where many of the assets (and value) now lie?

Well done, Ryk. You were the only journalist with the balls to go after Georgiou and the money that was stolen from the PIC investors. So sad that more than 10 years ago I tried so hard on RSG Geldsake to warn investors about this scam. It shows the power of investigative journalism and I am certain there is much more to be uncovered. And as Julius Cobbet points out, he and Tito Mboweni are great chums and our esteemed finance minister was chairman of Accelerate until he was appointed to the cabinet.

I remember those days clearly. Magnus warned RSG listners against the property syndicates. Julius Cobbet investigated the Relative Value Arbitrage Fund that was a ponzi scheme from day one. These schemes were successful because they bribed financial advisors to sell to uninformed individuals. Financial advisors recieved commissions ranging from 5 to 10 percent.

The market offers a solution, or scheme, for every need of the investor. We should be careful what we wish for.

I can honestly say that Moneyweb did an excellent task at informing and protecting their readers. The investor can certainly limit his losses by visiting Moneyweb regularly. Staying informed helps us to wish for realistic returns from legitimate opportunities.

The one insurmountable fact: PIC was investigated by the SA Reserve Bank and not found to be ‘illegal’. At that time Tito Mboweni was the Governor of SA Reserve Bank. Years down the line he was on the Board of Accelerated. Which begs the question: Was a legitimate investigation actually launched into the activities of PIC and Georgiou by the then SA Reserve and Tito Mboweni??????

I think it is time that Mr Tito Mboweni who was appointed as a NON EXECUTIVE OF ACCELERATE should be asked a few critical questions or did he only add face value to Accelerate to detract the attention from Michael Georgio Nic^s son wheelings and dealings with poor old peoples properties that was paid for in hard earned pension money PLEASE JUDGES AND FINANCIAL INSTITUTIONS TAKE NOTE

Don’t know the detail here due to it’s long history and I fortunately did not invest in this.

We talking big numbers here R7.8 BN. How does he sleep at night even if he did not do something wrong there must be a lot of p****d off people, just check peoples reaction if something physical gets stolen from their house never mind R100K’s or R1M’s.

I am also amazed that with such a big number this does not get much mention in the mainstream media coverage.

Exactly this is the question that everybody is asking. We have contacted numerous media role players even Carte Blanche but no actions Nevertheless communication has been forwarded again and it will not stop untill we get a response NEVER EVER QUIT IF RIGHTEOUSNESS IS THE KEYWORD

What a wonderful world we live in? All of a sudden his companies are “financially distressed”. Cannot afford to pay R7,8 Billion to creditors.
Who audited his books? This man is a thief! When a person shoplifts and gets caught, the consequences are serious for the perpetrator. But this man applies for “financial distress” for misappropriating billions of rands ? In China, this man would have been tried and in two weeks would have been sentenced to death.

Absolutely… it’s mind boggling!!

Law’s that are put in place to protect the innocent get misused by the guilty.

A person get’s instantly fined and /or jail time for making a racial or slanderous comment.

BUT Billion’s of Rands go missing 10 years ago already and there is still no resolution to this matter???
Makes one wonder who is protecting whom????

As the old saying goes, “It’s not what you know, but who you know,” and this could very well be applicable here?

I find it strange that Orthotouch which is in Business Rescue already with Hans Klopper now with no assets and a shelf company can be put into Business Rescue once again with a creditors meeting in 10 days time ——Windeeds have shown that there are no properties in Orthotouch as all have been sold to Accelerate!!! Can someone explain. Strangest thing as well is that the Orthotouch website has had a revamp with all newsletters updated for the past year whilst a few weeks ago there was nothing ……. also we are told in one of these newsletters that are never sent to the investors by the way that if we continue with litigation we will no longer be paid our interest. Funny thing is we have had no interest for the past 18 months —- so can someone explain this one as well!!!!!!

This the first time Orthotouch (and Zephan) is going into Business Rescue…
The Business Rescue under Hans Klopper was for the Highveld Syndication Company’s.
Maybe Georgiou thinks he is being quite clever…??
Orthotouch and Zepahn were supposed to be the RESCUE VEHICLES for the HIGHVELD SYNDICATION’S!
It is such a confused web…!!!!

However, the fact that the CIPC has not done due dilelgence and seen that the Properties were moved to ACCELERATE (…which belong’s to Nic’s son, Michael) is most MIND BOGGLING???

And again who are the new Business Rescue Practitioners – have they done their homework or is this just aiding and abetting!!!!!!

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