The ANC and its alliance partners in KwaZulu-Natal will picket outside the Pietermaritzburg High Court on Friday when the Prudential Authority and Ithala Bank exchange legal blows inside. File photo
The beleaguered Ithala Development Finance Corporation Bank, on the verge of liquidation, has won an order to claw back more than R10 million from Loyisa Consulting and Projects, which had been granted as a loan in 2011 ostensibly for a milk processing plant.
This comes as the ANC and its alliance partners in KwaZulu-Natal will picket outside the Pietermaritzburg High Court on Friday when the Prudential Authority and Ithala Bank exchange legal blows inside.
The High Court in Pietermaritzburg on Tuesday has ordered that the company, along with company principals Luyolo Lennox Makaula, Liziwe Pepeta and Donald Luthando Loyiso Pepeta, pay Ithala R10.1m jointly and severally and also pay interest at Ithala’s lending rate minus 2% or the maximum rate.
The court also ordered that an over 810 hectares farm in Kwazulu Natal owned by the company held by deed of transfer, was declared to be specially executable and that Ithala perfect the general notarial bond by the company in respect of all its movable assets to the value of more than R2.8m be attached.
The company and its principals were directed to pay the costs of the application jointly and severally, the one paying the others to be absolved on a concluded loan agreement in terms of which it lent it the sum of R11.4m with the respondents agreeing to stand as sureties for the obligations of the company to the bank.
Due to defaults, in 2015, the loan agreement was varied to convert the then existing arrears of the company to be capitalised to form part of the debt and the instalment payable was increased from the amount of R95 441 per month to R107 165.60 per month. The term of the loan agreement remained unaffected by these changes, as did all its other terms.
Ithala said the company thereafter breached its repayment obligations to it, fell into arrears with its payments leading to the bank cancelling the loan agreement in June 2023.
The court said Loyisa Consulting and Projects had delivered an answering affidavit in which they generally and vaguely disputed Ithala’s claim and explained that the money that the Loyisa loaned from Ithala was to assist it in developing a milk processing plant.
The project failed and Ithala granted a grace period of one year. But the business was subject to further unexpected blows after the variation agreement had been agreed to and, ultimately, it found itself again in financial straits.
Loyisa submitted to the court that it had devised, and was implementing, a turnaround strategy, which it is certain will lift it from its predicament and guide it to ultimate success but it required Ithala to buy into it and allow time for implementation.
The court noted that Ithala had declined to support the turnaround strategy with the company consequently stating it was “disingenuous and inconsiderate” in declining to view the turnaround strategy with the same enthusiasm with which they viewed it.
“All that the respondents can offer is the promise of expected sunshine that will allegedly follow once the first respondent commences with the turnaround strategy,” said Judge J Mossop.
“That, of course, is not an answer to breaches, deficits and failures that have already occurred, nor does it meet the fact that the applicant has already cancelled the loan agreement.”
The company’s consultancy wing was previously reported by the Umzimkhulu Local Municipality in its financial report to have been commissioned to develop a business plan for the upgrades, renovations and restoration of Umzimkhulu Memorial Hall, including additional structures.
It was awarded the contract to execute the projects after the feasibility study aligned with the business plan proposal came with an estimated cost of R22m to finish all the required scope.
The municipality’s reports noted that due to the limited funds, the scope had to be reduced to be within R17.9m.
The tender was awarded to a consortium formed by Loyisa Consultants for the implementation of the approved business plan. Loyisa Consultant was also tasked to source funds from various funders to ensure that the project could be finished within the required scope and a proposal was sent to National Lottery and CoGTA’s 1 Small Town Rehabilitation programme which both failed to secure funding.
During implementation there were various problems encountered by the municipality emanating from non-performance or poor performance by the consortium which led to the termination of the consortium.
Following the termination of the consortium, the municipality developed terms of reference for the completion of the partially built structure and rehabilitation of the existing hall. Processes led to the tender awarded to Buyeye Consulting, a Quality Surveying practice previously involved in the project as a Quantity Surveyor which completed the project.
BUSINESS REPORT