www.moneyweb.co.za/moneyweb…/nova-insolvency-pays/

Extract:
“The delay ensured that Nova, a high-profile company tasked by the high court to repay investors of the largest failed property investment scheme, could hide the disclosure of its dire financial position to debenture holders, creditors and other stakeholders for five months.”
This “hiding” was in fact for a period of thirteen months, dating from the late publication, in late December ’23, of the 2023 financial statements – which was the last public communication by Nova prior to the release of the ’24 statements in January ’25

This “hiding” was in fact for a period of thirteen months, dating from the late publication, in late December ’23, of the 2023 financial statements – which was the last public communication by Nova prior to the release of the ’24 statements in January ’25

We have learnt that appointments have been made and that they will be briefed by CIPC officials on 6 March “to unpack the preliminary report and scope the inquisition’s objectives and expected outputs (a final report with recommendations)”
This will trigger the release of the Investigation’s Interim Report. It will be emailed to those of the investigation participants who have returned signed non-disclosure agreements. CIPC then allows a thirty-day period “to allow affected parties to gather supplementary and supporting evidence and explore any other available legal remedy, while awaiting the contemplated inquisition.” Affected parties are the investigation participants
Then the investigation’s preliminary outcomes will be addressed at two levels:
* An “inquisition” will cover the “origin of the Schemes of Arrangement” (SoA) which means, in effect, how the Sharemax Business Rescue Plan originated and how it was sanctioned by the Courts under the provisions of Section 311 of the Companies Act * A separate internal tribunal within the Dtic (Department of Trade , Industry and Competition – of which CIPC is a Division) to address “the execution by Nova” meaning the execution of the SoA mission which is restitution for the original Sharemax investors or their successors and the reason for Nova’s existence
Thereafter, the Final Report will be released and the matter will enter a new phase where “a higher authority must be approached for a declaratory order.” But, “This obviously cannot happen before we give vent to Section 41 of the Constitution to allow those who may have been wrong in endorsing the Schemes to regularise a “crime”( which, in terms of the preliminary report; is found to be amiss and unlawful) a chance to defend their historical actions or concede that they were factually wrong.”
In other words, the findings which will hopefully turn the historical allegations of illegality and irregularity about the PSPC industry shut-down, into “fact” and presumably, persons and entities – both in the private and public sectors – will be named and thus, effectively, accused of “a crime” or wrongdoing. It is those persons and entities who/that will be given the chance to “defend their historical actions or concede that they were factually wrong”
What will follow is that quite possibly there could be legal actions which, in their turn, will take time. And then, there may also be a, possibly extended, period of negotiations on how to achieve restitution for the Sharemax investors
So, whilst the investigation is moving forward to its conclusion and whilst there is a good chance that the initial outcomes will beneficial for the Sharemax investors, these will also be the start of a lot of other legal processes which in their turn, will probably also take time

Ons het verneem dat aanstellings gemaak is en dat hulle op 6 Maart deur CIPC-amptenare ingelig sal word“to unpack the preliminary report and scope the inquisition’s objectives and expected outputs (a final report with recommendations)”.
Dit sal die vrystelling van die Ondersoek se Tussentydse Verslag veroorsaak en wat sal per e-pos gestuur word aan diegene van die ondersoekdeelnemers wat ondertekende Non-disclosure Agreements teruggestuur het. CIPC laat dan ‘n tydperk van dertig dae toe “to allow affected parties to gather supplementary and supporting evidence and explore any other available legal remedy, while awaiting the contemplated inquisition.” Geaffekteerde partye is die ondersoekdeelnemers
Dan sal die ondersoek se voorlopige uitkomste op twee vlakke aangespreek word:
– Die “inkwisisie” sal die “origin of the Schemes of Arrangement” (SoA) dek, wat beteken: hoe die Sharemax Besigheidsreddingsplan ontstaan ​​het en hoe dit deur die Howe goedgekeur is kragtens die bepalings van Artikel 311 van die Maatskappywet
– ‘n afsonderlike interne tribunaal binne die Dtic (Department of Trade, Industry and Competition) waarvan CIPC ‘n afdeling is, om “the execution by Nova” aan te spreek, wat beteken die uitvoering van die SoA-missie deur Nova waarvan die terugbetaling aan die oorspronklike Sharemax-beleggers of hul opvolgers hul bestaansrede is
Daarna sal die finale verslag vrygestel word en die aangeleentheid sal ‘n nuwe fase betree waar “a higher authority must be approached for a declaratory order.”Maar, “This obviously cannot happen before we give vent to Section 41 of the Constitution to allow those who may have been wrong in endorsing the Schemes to regularise a “crime”( which, in terms of the preliminary report; is found to be amiss and unlawful) a chance to defend their historical actions or concede that they were factually wrong.”

Met ander woorde, die bevindings wat hopelik die historiese bewerings van onwettigheid en onreëlmatigheid oor die sluiting van die PSPC-industrie sal verander tot in “feitlik” en vermoedelik sal persone en entiteite – beide in die private en openbare sektore – genoem word en dus, effektief, van “‘n misdaad” of oortreding beskuldig word. Dit is daardie persone en entiteite aan wie/wat die kans gegee sal word om te “defend their historical actions or concede that they were factually wrong”
Wat sal volg, is dat daar heel moontlik regsaksies kan volg wat op hul beurt tyd sal neem. En dan kan daar ook ‘n, moontlik verlengde, tydperk van onderhandelinge wees oor hoe om restitusie vir die Sharemax-beleggers te bewerkstellig

Dus, terwyl die ondersoek vorder na sy afsluiting en terwyl daar ‘n goeie kans is dat die aanvanklike uitkomste voordelig sal wees vir die Sharemax-beleggers, sal dit ook die begin wees van baie ander regsprosesse wat in hul sin ook tyd sal neem

Disappointing at one level because the CIPC investigation into Nova and the shut-down of the Property Syndication Promotion Companies (PSPCs) – including Sharemax – has not yet moved to the next stage, viz: the release of the Investigation’s Interim Report which will herald the start of the endgame

It is our understanding that, whilst the report is ready for release (and has been for more than a year now), the current delay is internal at CIPC where problems are being experienced with the assignment of States Advocates to “head up” the further processes (this subject to clarity as to what their specific role is to be)

We hope that the release will take place in the near future so that CIPC and the investigation participants – both private sector and from state and oversight bodies – can, with minimal delay, reach consensus on the findings to be tabled in the Interim Report and move speedily on to the finalisation and production of the Final Report whereafter the findings will become public knowledge and we will then learn of them and of the proposed remedial actions to bring about restitution and, hopefully, compensation for the Sharemax investors

The other “disappointment” – or better, cause for serious concern – is the ongoing absence of the publication of the Nova Annual Financial Statements for 2024. Financial year-end is 28 February and thus, the AFS should have been published by end-August – six months after year-end as per the Companies Act requirements

The 2023 AFS were only published on 23 December ’23 and we think that we have a new record in terms of how late the ’24 publication is – and ongoing

But, why is it taking so long? Surely, in an environment of competent company management by the board and the CEO, there should not be delays every year – which is a historical fact

As per AFS ’23, there are only nine commercial properties left in the portfolio (of which, The Villa is non-operational anyway). Of the nine residential/mixed use “development” properties, there is no development under way at all (we say this based on the evidence of views of 2024 Google Maps satellite images of the properties). The contentious Cold Creek property is not included here. It was not part of the original portfolio and is not debenture linked

How hard can it be therefore, to produce and publish the AFS? What does the ongoing delay mean? Is the board having the usual problem of getting auditor sign-off of the AFS format that Nova has presented to them. Why, yet again, if indeed so?

Is the content of the AFS of such a nature that it will actually show that Nova is not a going concern anymore and is if fact, insolvent – which has been inferred in the media, out of previous AFS. Would such a situation cause CIPC to rule that Nova must stop trading? What would the implications of that be?

In the meantime, no progress towards debenture repayment and no communication from Nova since 23 December, 2023!

What is the Nova board hiding? It seems pretty clear that they have something to hide and it can’t be good news

All this whilst the executive directors continue to milk the company via their “market related” remuneration. The ’23 financial year executive director remuneration (actually shown as 2022 remuneration but perhaps this is a “typing error”) for Myburgh, Haese and Osterloh, was 12.2 million gross. Ironically, 4.8 million of that went to Sars as personal tax and thus, they (Sars), benefit out of the ineffective management and operations of the company at the expense of the Debenture Holders, the company’s largest creditor

Teleurstellend op een vlak omdat die CIPC-ondersoek na Nova en die sluiting van die Property Syndication Promotion Companies (PSPCs) – insluitend Sharemax – nog nie na die volgende stadium beweeg het nie, naamlik: die vrystelling van die Ondersoek se Tussentydse Verslag wat die begin van die eindspel hoort te wees

Ons verstaan ​​dat, alhoewel die verslag gereed vir vrystelling is (en nou al meer as ‘n jaar), die huidige vertraging intern by CIPC is waar probleme ondervind word met die toewysing van die saak aan Staat Advokate vir deelname aan die verdere prosesse (dié is onderhewig aan opheldering oor wat hul spesifieke rol moet wees)

Ons hoop dat die vrystelling in die nabye toekoms sal plaasvind sodat CIPC en die ondersoekdeelnemers – beide die in die private sektor en van staats- en toesigliggame – met minimale vertraging konsensus kan bereik oor die bevindings wat in die tussentydse verslag ter tafel gelê moet word om spoedig te kan skuif na die finalisering en produksie van die Finale Verslag, waarna die bevindinge publieke kennis sal word en ons dan daarvan sal leer en van die voorgestelde regstellende aksies om restitusie en, hopelik, vergoeding vir die Sharemax beleggers

Die ander “teleurstelling” – of beter, rede tot ernstige kommer – is die voortdurende afwesigheid van die publikasie van die Nova Finansiële Jaarstate vir 2024. Finansiële jaareinde is 28 Februarie en dus moes die AFS teen einde Augustus gepubliseer gewees het – ses maande na jaareinde volgens die vereistes van die Maatskappywet

Die 2023 AFS is eers op 23 Desember ’23 gepubliseer en ons dink dat ons ‘n nuwe rekord het in terme van hoe laat die ’24 publikasie is – en nog aan die gang is

Maar hoekom vat dit so lank? Sekerlik, in ‘n omgewing van bekwame maatskappybestuur deur die direksie en die “CEO” behoort daar nie elke jaar vertragings te wees nie – wat ‘n historiese feit is

Volgens AFS ’23 is daar slegs nege kommersiële eiendomme oor in die portefeulje (waarvan The Villa in elk geval nie-operasioneel is nie). Van die nege residensiële/gemengdegebruik “ontwikkeling”-eiendomme is daar geen ontwikkeling aan die gang nie (ons sê dit op grond van die bewyse van 2024 Google Maps-satellietbeelde van die eiendomme). Die omstrede Cold Creek-eiendom is nie hier ingesluit nie. Dit was nie deel van die oorspronklike portefeulje en is nie skuldbrief gekoppel nie

Hoe moeilik kan dit dus wees om die AFS klaar te maak en te publiseer? Wat beteken die voortdurende vertraging? Het die direksie die gewone probleem om ouditeur-aftekening te kry van die AFS-formaat wat Nova aan hulle voorgehou het. Waarom, weereens, indien dit wel so is?

Is die inhoud van die AFS van so ‘n aard dat dit eintlik sal wys dat Nova nie meer ‘n “going concern” is nie en wel insolvent is – wat in die media afgelei is, uit vorige AFS. Sou so ‘n situasie veroorsaak dat CIPC beslis dat Nova moet ophou handel dryf? Wat sou die implikasies daarvan wees?

Intussen, geen vordering met die terugbetaling van die oorblywende skuldbriewe en geen kommunikasie vanaf Nova sedert 23 Desember 2023 nie!

Wat steek die Nova-raad weg? Dit lyk redelik duidelik dat hulle iets het om weg te steek en dit kan nie goeie nuus wees nie

Dit alles terwyl die uitvoerende direkteure voortgaan om die maatskappy te melk deur hul “markverwante” vergoeding. Die ’23-boekjaar se uitvoerende direkteursvergoeding (eintlik getoon as 2022-vergoeding, maar miskien is dit ‘n “tikfout”) vir Myburgh, Haese en Osterloh, was 12,2 miljoen bruto. Ironies genoeg het 4,8 miljoen daarvan na Sars gegaan as persoonlike belasting en dus het hulle (Sars) gebaat by die oneffektiewe bestuur en bedrywighede van die maatskappy ten koste van die Skuldbriefhouers, die maatskappy se grootste skuldeiser