Proposed sale or auction of ‘tombstone mall’ thrown into disarray

The proposed sale or auction of The Villa ‘tombstone’ mall in terms of a proposed business rescue plan for the developer of the derelict half-built shopping centre in Pretoria’s eastern suburbs has been thrown into disarray.

On Thursday the Companies and Intellectual Property Commission (CIPC) advised George Nell, business rescue practitioner (BRP) for Thumos Properties 1, that the CIPC compliance notice issued to the Nova Property Group in July 2022 expressly prohibits Nova from disposing of any immovable properties under its control.

Read: CIPC orders Nova to stop selling properties

The Thumos Properties 1 business rescue plan contained two options.

Option A, proposed by Nova subsidiary Villa Retail, involves its offer to acquire The Villa properties and complete construction of the mall subject to a number of conditions, including Villa Retail securing foreign investment to fund the completion of the mall.

Option B involves the sale of The Villa via a public or sheriff auction.

‘No’ says CIPC

Cuma Zwane, a senior investigator at CIPC, said in correspondence to Nell on Thursday that it has come to the CIPC’s attention that Nell’s business rescue plan for Thumos Properties 1 includes the possibility of placing The Villa, a property under control of Nova PropGrow Group Holdings (Nova), under the hammer or finding a suitable buyer.

“It is our opinion that the [CIPC] notice holds the same weight as an interdict and/or a moratorium until set aside or modified,” said Zwane.

“As such, the portion of The Villa (as well as the immovable property) reflected in Nova’s balance sheet as at 28 February 2022 may not be disposed of.

“If you hold a different opinion from us, kindly inform us in writing before executing any of the actions that may constitute a breach of the notice by the Nova Board.”

A copy of the correspondence by CIPC to Nell is in Moneyweb’s possession.

Attempts to obtain comment from Nell were unsuccessful.

Nova said in August 2022 it believed the CIPC’s compliance notice banning the group from selling any more properties was flawed and that it would take it on review.

Sharemax

Thumos Properties 1 was the developer of The Villa, which was promoted and marketed by Sharemax as a property syndication scheme.

Nova is the Sharemax rescue vehicle that took ownership of all the former Sharemax properties and, in terms of a Companies Act Section 311 Schemes of Arrangement, was explicitly tasked to repay investors within 10 years.

This period expired in January 2022 without investors being repaid.

Moneyweb calculations previously revealed that since 2012 Nova has since sold 19 of the 28 unencumbered investment properties it inherited from Sharemax.

Since 2017 alone, Nova has sold 10 shopping centres for about R360 million – of which only R110 million was returned to investors.

Read:
Sharemax rescue vehicle makes a U-turn on payments to investors
‘Investors screwed twice’
Nova continues to flog properties

About 18 600 investors put a total of R4.6 billion into Sharemax, which collapsed in 2010.

This came about after a Registrar of Banks investigation – which found that Sharemax was operating in contravention of the Banks Act – became public knowledge and led to funds from new investors into Sharemax schemes drying up.

Asset

The only asset owned by Thumos Properties 1 is a 70% undivided portion of the land on which The Villa has been built.

The remaining 30% is owned by Villa Retail Park Investments.

However, Villa Retail claims 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 Properties 1.

This agreement was subject to the payment of certain amounts by Villa Retail and fulfilment of certain obligations, which it claims were fulfilled.

This dispute is the subject of ongoing litigation.

Nell confirmed earlier this month to Moneyweb that he has given Villa Retail permission to proceed with a high court application to resolve a dispute with Thumos Properties 1 about a sale of business agreement related to The Villa.

He said legal advice he obtained from a senior advocate is at this stage not to accept Villa Retail’s claim to this further 50% in The Villa.

“They have to prove that in a court of law. The advice is that I cannot be judge, jury and executioner and I must wait for the court ruling in that regard,” he said.

Nell previously said the successful execution of Option A would in terms of the business plan allow him to pay GD Irons Construction, the building contractor for The Villa appointed by Thumos Properties 1.

GD Irons Construction has a lien over the properties on which the mall was built because of non-payment for work done. It has claims valued at almost R600 million accepted by the BRP.

The largest of these claims relates to a high court order it obtained last year in terms of which Thumos Properties 1 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.

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