The protracted legal battles about the business rescue of Tongaat Hulett took a decisive turn this week when the high court in Durban struck an urgent application by RGS, a minor creditor, off the roll with costs.
This is the fifth time in 18 months that RGS has either brought or driven a case in the court — each one aimed at throwing a spanner in the works of Tongaat’s business rescue and holding up the business rescue plan.
RGS sought to compel Tongaat’s business rescue practitioners (BRPs) to disclose details on Vision consortium’s funding arrangements tied to its acquisition of the lender group’s claims and the implementation of the business rescue plan.
The court found RGS failed to show any legal urgency and dismissed the case with costs.
Vision consortium and BRPs oppose RGS
Vision consortium, led by tech billionaire Robert Gumede, and BRPs Metis Strategic Advisors opposed the application and sought punitive costs against RGS.
This forms part of a broader narrative pushed by RGS, a Mozambican-based group that had previously positioned itself as a rival bidder for Tongaat, alleging that Vision, despite being selected as the successful bidder, lacked the financial capacity to secure funding and pay the nine creditor groups involved in the deal.
Allegations of financial misconduct rejected
RGS has accused the BRPs of breaching their statutory and fiduciary duties, alleging that Vision used external financing to acquire the lender group’s claims and security, using Tongaat’s assets as collateral.
Though RGS grounded its case in a July judgment ordering the disclosure of certain information by Vision, the enforcement of that judgment was suspended after an appeal lodged on July 15.
Despite this, RGS only moved to launch its urgent application nearly a month later — a delay the court found unexplained and unjustified.
Vision consortium defends its position
According to Vision, RGS’s credibility is already in tatters due to the group’s admission under oath that a fraudulent R2bn proof of funds letter had been submitted to the BRPs, purportedly from Absa Mozambique. The letter was used to back RGS’s own failed rescue proposal before it abruptly withdrew from the process.
“RGS bought an insignificant claim to pursue vexatious litigation aimed at derailing the approved business rescue plan and extorting Vision and the BRPs, abusing court processes under the guise of being an affected creditor,” the consortium said.
“Vision denies any prohibition on acquiring the lender group’s claims using shareholder or third-party funding and rejects claims that Tongaat Hulett’s assets were used as collateral,” it said.
Before the September 3 hearing, RGS paid the R1.4m security for costs as ordered by the court, a requirement stemming from its status as a foreign company.
“This application is the third (almost identical) urgent high court application instituted by RGS in its own name, as part of RGS’s ongoing campaign to frustrate the successful business rescue process of Tongaat Hulett. RGS’s first application in the high court was struck off the urgent roll earlier this year,” the turnaround experts said.
The BRPs said the adopted plan worked. Its successful rollout would secure Tongaat’s future, protect thousands of jobs, and keep the sugar industry — and by extension, the economy of KwaZulu-Natal and the nation — on steady ground.
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