Jacques du Toit, the business rescue practitioner of Orthotouch and Zephan, has vehemently denied any wrongdoing in having instructed that an amount of R1.12 million due to Orthotouch investors be transferred from an attorney’s trust account to Orthotouch.
In a 100-page affidavit in response to allegations by Robert Black, a former investor in the HS companies, Du Toit also states he has already instructed his lawyer to institute defamation proceedings against Black, and his attorney Ilze Eichstadt. He also intends to lay a complaint of professional misconduct against Eichstadt “for preparing an affidavit which she should have known contains false allegations”.
Du Toit submitted this affidavit to the South African Restructuring and Insolvency Practitioners Association (Saripa) after the body requested a response to Black’s affidavit.
Du Toit has also repaid the money into a trust account until there is clarity regarding its status.
In his founding affidavit, Black alleged Du Toit unlawfully authorised the transfer of the R1.12 million to Orthotouch. The money was originally due to former investors in the Highveld Syndication schemes, in terms of the Section 155 Scheme of Arrangement (SOA) which brought Orthotouch about.
However, in 2018 Zephan, owned by Nic Georgiou and the underwriter of the SOA, terminated all interest payments to around 4 500 investors who were deemed to support legal action against Georgiou and entities related to him.
This was in contravention of the SOA, and the interest was paid into an attorney’s trust account on demand of the former receiver of the scheme, Derek Cohen, over which he had full control.
An escrow agreement was signed by Cohen and Georgiou, on behalf of Zephan and Orthotouch in November 2018, which provided that the monies would be held in the trust account “until directed by the Receiver to make payment to each investor, alternatively return the payment to Orthotouch/Zephan.”
However, Cohen resigned shortly afterwards in 2019, and no replacement has been appointed to date.
Du Toit was appointed as the business rescue practitioner of Zephan and Orthotouch in 2019 and assumed control of both companies.
In response, Black laid criminal charges of theft against Du Toit.
Du Toit’s affidavit
Du Toit states in his affidavit that he had authority to access the funds as the business rescue practitioner of Zephan and Orthotouch. He adds that the escrow agreement entered into by the parties also allowed him to do so.
“It is inconceivable on what basis Black could have come to the conclusion that I have stolen these funds. I have instructed my attorney to issue summons against Black and Eichstadt based on defamation and to lay a complaint of professional misconduct against Eichstadt for preparing an affidavit which she should have known contains false allegations.”
Despite these views that he had the authority to access the funds, Du Toit has nevertheless placed the money back into an independent trust account. This is confirmed in an email Johan Victor, Du Toit’s attorney, sent to Saripa CEO René Bekker.
“I wish to confirm that the deposit of the disputed amount has indeed now taken place and the funds will be held in Trust pending a determination of whether the creditors, to whom these funds may relate to, are secured or unsecured for purposes of the business rescue process,” Victor wrote.
Moneyweb approached Eichstadt for comment. She declined to comment on the content of Du Toit’s affidavit, but said an answering affidavit is being prepared.
Business rescue plans
During the course of communication between Moneyweb and Victor, Moneyweb requested an update related to the business rescue process of Zephan and Orthotouch.
Through Victor, Du Toit stated that he is busy with a revision of the business rescue plans and that he will publish a revised plan within the next few weeks.
Victor said the Zephan and Orthotouch draft Business Rescue Plans had been supplemented with additional information to address concerns raised by affected parties and their attorneys. “Some of the additional information relates to payments made to pre-2011 creditors (not addressed in previous draft plans). Also, comprehensive information came to hand about properties which formed part of the previous Scheme of Arrangement – which in turn was the result from the previous Business Rescues (of various underlying companies [of which Hans Klopper was the BRP]).
“Ample information about the 17.29% mark-up by Bosman & Visser and the HS Companies, which was added to properties acquired for R3.9 billion is also included in the revised plans together with the distribution breakdown of such mark-up.”
Victor also said this plan would include information related to the second creditors’ meeting where parties will vote on the adoption of the plan. “It is foreseen that this meeting will be a hybrid meeting, where creditors can either attend personally or via an electronic feed.”