OneLaw decides against liquidation

Employees face uncertainty.

CAPE TOWN – Moneyweb has reliably learnt that Cambist’s troubled former parent company OneLaw has not applied for liquidation. This is despite telling its staff last week Monday that it would be doing so, and even providing the name of the company that was supposedly acting as the liquidator.

OneLaw dismissed almost its entire staff compliment on Monday morning and told them that due to financial difficulties they would receive no further compensation for their service. Only a few former staff members were offered posts at law firm Flemix & Associates, while four were part of the newly-constituted separate entity housing the Cambist online platform.

On Wednesday OneLaw sent an email to former employees in which it stated that it “finds itself in an irrecoverable financial position currently”. It added that the “company has no future viability to rectify its operations resulting in its immediate unavoidable closure”.

Staff were told that an “independent firm of curators” would be appointed to sell the company’s assets and that they would have some claim to the value realised. At the end of the letter, the name and contact details of a liquidator were given.

However, it has since transpired that no liquidator was ever appointed. The liquidator identified in the letter has confirmed to Moneyweb that it was seeking appointment, but this had not happened.

On Friday afternoon, the liquidator then received an email from an attorney representing OneLaw to say that the company would instead be investigating other avenues.

It is not clear at this stage what those other avenues may be, but business rescue may be one. This is the path most recently taken by microlender Bridge, which has very close ties to OneLaw and Cambist through the Aldum family.

The news that OneLaw will not be liquidating does however mean that it must re-engage with its employees. According to Irvin Lawrence of ENS Africa, the only situation under which employees can be summarily dismissed, as was the case with OneLaw’s staff on Monday, is if the company is liquidating.

In a liquidation, all employee contacts legally come to an end. They are then entitled to claim certain rights against the estate of the liquidated company.

However, if OneLaw is not liquidating, then its staff members are still considered employed.

“If you’re not liquidating you can’t simply send people home,” Lawrence says. “If OneLaw says that the employment contracts have been terminated, then they haven’t followed process and that’s an unfair dismissal.”

Lawrence says that Section 189 of the Labour Relations Act requires that companies go through an articulated consultation process when terminating employee contracts. This cannot happen in just one meeting, as many different steps have to be taken.

It is therefore vital that employees get clarity on whether they were retrenched, or simply told to go away and not come back.

“If OneLaw is saying they were retrenched, then two things need to happen,” Lawrence says. “Firstly, they have to have been consulted, because there has to be a discussion about options and alternatives. And there also must be an agreement on a severance package, because an employee is entitled to that as of right.

“But if employees were simply told to go away and not come back, then that’s a dismissal,” Lawrence says. “And if there’s no liquidation, then OneLaw should have then retrenched them. If they haven’t, that becomes an issue you can challenge in the labour court.”

A delay in closing down the company could also heighten worries amongst former employees that OneLaw now has more opportunity to separate out other parts of the business or for assets to be removed. Separate sources, speaking on condition of anonymity, have already raised concerns that OneLaw’s IT function that was taken over by Flemix & Associates may have moved together with its hardware and software which could represent a dissipation of assets.

However, Moneyweb has established that should any company be liquidated, the liquidator is entitled to go back six months, or in some cases two years, to investigate its actions. So this delay should not be to the detriment of any creditors.

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