Business rescue practitioners for the eight Gupta companies under rescue have applied to the High Court in Johannesburg for the winding up of Oakbay Investments, one Gupta company that avoided being placed under rescue.
The application is being brought by Tegeta Exploration and Resources and Islandsite Investments, both of which were placed under business rescue nearly two years ago.
This is the third time the practitioners have applied for the winding up of Oakbay. The first application in September 2018, claiming R2 million in rental and services owed by Oakbay to Tegeta, was withdrawn when the claim was settled. In February 2019 a second winding up application claimed Oakbay owed R3.8 million, but it too was withdrawn when the bill was paid at the last minute.
When Oakbay was initially unable to settle Tegeta’s above-mentioned R2 million claim, its acting CEO Ronica Ragavan admitted that the company was unable to pay, according to an affidavit by Kurt Knoop, one of the business rescue practitioners. Despite Oakbay later settling the claim, acknowledging being unable to pay constituted an act of insolvency.
This act of default triggered a claim for repayment of a loan of R402.3 million, a figure that was determined after an external forensic analysis.
The attorneys for the business rescue practitioners demanded repayment of the loan in September 2018, to which Oakbay replied that it was not liable.
“The denial of liability was laconic in the extreme, without any elaboration,” says Knoop’s affidavit.
Oakbay formed part of the Gupta empire, and ran into trouble after SA’s commercial banks closed its accounts, citing reputational risk and the potential breach of banking regulations. The Gupta companies then relied on banking facilities provided by Bank of Baroda, which conducted a correspondent relationship with Nedbank. Bank of Baroda notified Oakbay of its intention to terminate its transactional banking facilities in 2017, and would thereafter close its SA branch. This left Oakbay and the Guptas without any banking facilities, forcing them into business rescue.
Oakbay was the holding company for the Gupta empire, and was reliant on its underlying businesses for survival.
Its main asset is Tegeta, which holds shares in four companies: Optimum Coal Mine, Koornfontein Mines, Optimum Coal Terminal and Shiva Uranium, all of which are under business rescue. Cumulatively, these companies owe R4 billion to creditors and are currently under care and maintenance.
Oakbay’s other assets include: Oakbay Resources and Energy, which had a share in Shiva Uranium; Westdawn Investments (whose sole source of income was from mining contracts it had with Optimum Coal Mine); and two labour broking companies.
The entire business foundation of Oakbay has failed and is unlikely to ever recover as a business, says Knoop.
Business rescue practitioners have been unable to access company records and financial statements for Oakbay.
As Moneyweb previously reported, the remnants of the Gupta empire are facing multiple court battles, one of them from Westdawn for the liquidation of Optimum Coal, and another from black-owned mining group Lurco, which is asking the court to interdict the sale of Koornfontein to Black Mining Royalties for a much lower price than Lurco is offering.