Moneyweb
Content partner
3 minute read
1 Mar 2020
1:41 pm

‘Former’ property magnate owing millions pleads poverty

Moneyweb

Georgiou owes R12.9 million to a former investor in the Highveld Syndication schemes, but failed to pay the amount due.

Nic Georgiou. Image: Supplied

‘Former’ property magnate Nic Georgiou is facing provisional sequestration, after he failed to pay R12.9 million to a former investor in the Highveld Syndication schemes.

The payment became due to the investor, Suriya Noormahomed, late last year, after the Supreme Court of Appeal dismissed Georgiou’s appeal against a previous high court judgment.

This high court judgement found that the conditions of the original investment contract remained valid, even though the HS companies were put into business rescue and later restructured in terms of a Section 155 Scheme of Arrangement.

This meant Georgiou had to repay Noormahomed R12.9 million. However, Georgiou failed to pay the amount due.

Noormahomed brought the application for provisional sequestration, after Georgiou pleaded poverty when the sheriff of the court visited Georgiou’s residence in Johannesburg in January to seize assets to repay the amount.

According to the court papers, Georgiou declared to the sheriff he did not have the “money, moveable or disposable property” which could be used or sold to repay the claim.

However, the sheriff’s report also states that Georgiou replied “yes”, when he was asked whether he owned any immovable property which may be sold to repay Noormahomed.

In her affidavit, Noormahomed says her attorneys conducted deed searches and found that despite Georgiou’s admission, he doesn’t seem to own any immovable properties in the country.

“I submit that it is clear that Georgiou on his own admission, or at least inferentially, is concealing assets and that reasonable grounds, therefore, exist that a trustee will be able to unearth such assets which might then be attached, sold and the proceeds disposed of for distribution amongst creditors.”

Property mogul

In her affidavit, Noormahomed seems unconvinced that Georgiou does not have sufficient assets to repay her claim.

She lists numerous assets Georgiou has owned in the past. It includes a multi-billion-rand property portfolio housed in his company Zephan. A significant number of these properties were sold to the HS companies, including 42 particular properties which were sold for R3.4 billion. However, these properties were never transferred to the HS companies. Georgiou later sold to third parties, meaning that he sold the properties twice.

Says Noormahomed, “Under the circumstances, I submit that these various factors render it clear that Georgiou has something to hide and that good cause for believing that his dealings should be openly exposed and his personal financial position investigated and that assets are likely to come to light when a full investigation of Georgiou’s affairs under the very extensive powers of enquiry given by the Insolvency Act is conducted.”

Georgiou’s response

Georgiou needs to indicate whether he intends to defend the application. If he does, he will have to respond to Noormahomed’s claims.

If Georgiou doesn’t, he may be sequestrated. The court will then appoint a trustee who will have extensive powers to investigate Georgiou’s financial affairs, and it may reveal what happened to his wealth.

Georgiou did not respond to Moneyweb’s questions related to the application and the allegations made therein.

Significant implications for HS investors

This application may have a significant impact on other investors who may have similar claims as Noormahomed, as it will show whether Georgiou still has financial assets to honour such payments.

These claims may amount to billions of rands.

Brought to you by Moneyweb

For more news your way, download The Citizen’s app for iOS and Android.