The business rescue practitioners for Tegeta Exploration have filed an application for the liquidation of the Gupta-owned Oakbay Investments on the grounds that it cannot pay its bills.
This is the second time in nine months that an application has been made for Oakbay’s liquidation. The first time was in September last year, when the business rescue practitioners for Tegeta argued that Oakbay owed around R2 million in rent and other services and could not pay. The second time was in February this year, when the claim was for R3.8 million.
On both previous occasions, Oakbay managed to stave off liquidation by settling its outstanding bills.
Oakbay is opposing the liquidation and argues it does not owe the money claimed on the grounds that Tegeta owes it an even larger amount – R13.8 million – in terms of a management agreement between the two companies. It says the company is not insolvent and the dispute must first be resolved by way of arbitration, and that the attempt to liquidate Oakbay is premature. Tegeta, the holding company for eight Gupta-owned companies, is currently under business rescue. Oakbay is the one Gupta company not placed under rescue.
This is a case of one Gupta-owned company applying for the liquidation of another.
Kurt Knoop, arguing for the business rescue practitioners, disputes the existence of a “management agreement” between the two companies giving rise to Oakbay’s counterclaim for arrears management fees from Tegeta. “There is no truth in the defence,” he deposes in his affidavit before the South Gauteng High Court. “There is no management agreement and no arrear management fees. The allegations in these regards are so far-fetched and improbable that the court is justified in rejecting them on the papers.”
However, there is a written lease agreement in terms of which Oakbay is obliged to pay Tegeta R150 000 for rental of its current premises and other services. The claim of a second management agreement is a recent fabrication in an attempt to resist the winding up of Oakbay, says Knoop.
War of attrition
This is the latest chapter in a war of attrition between business rescue practitioners and the remnants of the Gupta empire.
Last year, the rescue practitioners were denied access to Oakbay’s premises to retrieve documents until the courts intervened and demanded they be given access.
Ronica Ragavan, acting CEO for Oakbay, argues in her replying affidavit that the application for liquidation is frivolous and that Tegeta “knows full well that [Oakbay] is not insolvent”. Oakbay decided rather than waste time after the previous attempt to liquidate it to pay the disputed amount and simultaneously bring an application for the removal of the business rescue practitioners “on the basis that they are conflicted”.
Oakbay also made an offer to pay an amount of money into the trust account of Tegeta’s attorney provided the business rescue practitioners resign.
Knoop responds that there is no proof that the funds deposited into the trust account of the Tegeta attorneys emanated from Oakbay. “This is due to the fact that [Oakbay] does not have a bank account in SA.” He says Oakbay’s claims that the business rescue practitioners are conflicted was previously heard and dismissed by the courts.
Tegeta and seven other Gupta companies were placed in business rescue in February last year after all local commercial banks withdrew their banking facilities.
Tegeta’s application is supported by two provisional forensic reports by Computer Forensic Services showing that billions of rands were randomly paid “without lawful cause” between Oakbay and its subsidiaries.
The case is expected to be heard next week in the South Gauteng High Court.