Affected persons set to vote on business rescue plan for company that owns 70% of The Villa on Tuesday.
The fate of The Villa ‘tombstone’ mall could become clearer after a meeting on Tuesday (8 August) of affected persons when they vote on proposals in the business rescue plan of Thumos Properties 1 (Pty) Ltd, the developer and owner of 70% of the half-built and derelict shopping centre in Pretoria.
George Nell, the business rescue practitioner (BRP) for Thumos, confirmed on Monday that the meeting was going ahead “at this stage”.
He also confirmed that an amendment has been made to the proposed published business rescue plan, with a new option added.
He said the main amendment is an option that GD Irons Construction takes over Thumos’s 70% ownership of the properties on which The Villa has been built as security for the debt owed to it.
Thumos, previously named Capicol, was the original developer of the mall and contracted GD Irons Construction to construct The Villa.
GD Irons Construction has a lien over the properties on which the mall has been built because of non-payment by Thumos for work done and has claims valued at almost R600 million accepted by the BRP.
The largest of these claims relates to a high court order GD Irons Construction obtained last year in terms of which Thumos was ordered to pay the company R249.4 million for unpaid costs incurred in the building of The Villa.
With interest, this claim now amounts to almost R500 million.
Nell is unsure if the value of 70% of the properties on which The Villa has been built will be sufficient to cover GD Irons Construction’s claim.
“They [GD Irons Construction] will take over 70% of the properties for their debt if the vote carries,” he said.
The remaining 30% of the properties on which The Villa has been built is owned by Nova Property Group subsidiary Villa Retail Park Investments.
Nova is the rescue vehicle of the failed Sharemax property syndication schemes.
Alternatives
Other options for The Villa business rescue plan for Thumos include an offer by Nova to acquire The Villa properties and complete the construction of the mall, subject to a number of conditions.
These conditions include Villa Retail securing foreign investment to fund the completion of the mall.
A further option is for The Villa to be sold via public auction.
A potential complicating factor with the new option in the business rescue plan is the claim by Villa Retail that it is entitled to the transfer of a further 50% undivided share of The Villa in terms of a settlement agreement entered into in 2011 with Thumos.
This settlement agreement was subject to the payment of certain amounts by Villa Retail, and it fulfilling certain obligations, which it claims were fulfilled.
However, this dispute is still the subject of ongoing litigation and Nell previously confirmed that legal advice he had obtained from a senior advocate was at this stage not to accept Villa Retail’s claim to this further 50% in The Villa.
Compliance notice
The Companies and Intellectual Property Commission (CIPC) last month also advised Nell that CIPC’s compliance notice issued in July 2022 expressly prohibits Nova from disposing of any immovable properties under its control.
Nell said on Monday this compliance notice does not affect the business rescue plan for Thumos because the options proposed only involve properties owned by Thumos and not by Nova.
“If Villa Retail has got a good case for the 50%, the court of law will tell the parties accordingly. So it’s not dealing with assets that belong to Villa Retail but properties that belong to Thumos.
“There are claims and counterclaims, and litigation has been pending for eight years,” he said.
“I was advised that I cannot play judge, jury and executor [for this dispute], and I followed that advice.”
Nell added that the new option in the business rescue plan was for the ‘voetstoots sale’ of Thumos’s 70% interest in The Villa to GD Irons Construction with “all the risks and rewards”.
If the meeting carries the vote for the new option, GD Irons Construction will be the owner of 70% of the properties for its debt and must negotiate with Villa Retail, he said.
“So none of Villa Retail’s rights are affected by this. They can still fight it out whenever they want to fight it out.”
Pie in the sky?
Nell declined to comment on whether the option in the business rescue plan for the proposed acquisition of The Villa by Nova was a ‘pie in the sky’ proposal in light of the recent high court application by the Quatro Group to liquidate 12 Nova companies for debts owed to some of its subsidiaries and the subsequent settlement of the case between the parties.
“They [Nova] dealt with the 12 liquidation applications successfully, and they are a business with ‘locus standi’ to look for money, so I cannot comment on that.
“I initially thought it will hamper their ability [to secure finance], but they sorted it out in a week or two.
“I don’t know what it [the settlement] entails, but they sorted it out, and they have got that proposal on the table,” he said.
Nell said GD Irons Construction has the biggest portion of the voting power for the meeting.
He added that other entities with a voting interest include Villa Retail in regard to Tshwane Metro rates and taxes it paid a long time ago and Quebec Electrical.
Nell said the Tshwane Metro could also have a voting interest because there are a few entities on the same municipal account – such as Villa Retail Park Investments, Thumos Properties 1, Thumos Properties 11, Thumos Properties 4 and so on.
“That must be sorted out before I can give the precise figure of their voting interest,” he said.
Villa Retail’s voting interest stems from a R6 million claim against Thumos that was accepted by the BRP, which arose from an acknowledgement of debt Villa Retail had to sign in favour of the Tshwane Metro to obtain the transfer of its 30% undivided share in The Villa properties.
However, the business rescue plan rejected another claim by Villa Retail of R1.3 billion, which emanated from Thumos allegedly causing such damages to Villa Retail.