‘Tombstone’ mall woes continue

The business rescue practitioner for Thumos Properties 1 (Pty) Ltd, the developer of The Villa ‘tombstone’ mall in Pretoria, has expressed ‘great concern’ about the impact on his business plan of a high court application to liquidate 12 companies in Villa Retail Park Investments.

George Nell, the business rescue practitioner (BRP) in question, admitted these latest developments might mean he needs to amend his business rescue plan.

Villa Retail Park Investments –a subsidiary of the Nova Property Group, rescue vehicle of the failed Sharemax property syndication schemes – owns 30% of The Villa while Thumos Properties 1 owns 70%.

Option A

Nell said Option A in his business plan for the latter involves an offer by Villa Retail to acquire The Villa properties and complete the construction of the mall, subject to a number of conditions.

These conditions include Villa Retail securing foreign investment to fund the completion of the mall.

Nell said the successful execution of this option 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.

But he questioned how Villa Retail will be able to buy The Villa:

“How and where will [it] get money to buy the mall while there are liquidation applications in the group?”

He aded: “GD Irons Construction holds a right of retention and sits with the asset [The Villa] in its possession and pays the insurance and guarding services. They need to be sorted out [in terms of the business plan].”

Read: Nova-controlled company wants to buy the ‘tombstone’ mall

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.

Nell said the liquidation application of Nova group companies “is of great importance to me”.

“I am now considering all this information to maybe amend my plan,” he said.

Nell therefore decided to postpone the proposed meeting of affected persons in Thumos Properties 1 to consider the business rescue plan for a further two weeks.

Options B and C

Option B in the business rescue plan involves the sale of The Villa via a public or sheriff auction.

Read: Sharemax ‘tombstone’ may soon be under the hammer

A new draft offer to Nell for The Villa by David Pieterse – who was previously on the team with Paul Kyriacou that 12 years ago planned and started construction of The Villa (Kyriacou is former MD of Capicol and sole director of Thumos Properties 1) – resulted in the second meeting of Thumos Properties 1 being postponed with a view to this draft offer possibly becoming an Option C in the business rescue plan.

However, Nell said this draft offer “has not developed to such an extent that it can form part of my plan – but it can still develop to that”.

Read: The Villa: Decision on future of ‘tombstone’ mall delayed

The liquidation application of Nova group companies is set down to be heard later this month but does not involve Villa Retail Park Investments or Zambezi Retail Park Investments.

The application has been brought by Quatro Group companies Quatro Security Services (Pty) Ltd and Quatro Cleaning Services (Pty) Ltd, which allege they are owed more than R13.84 million for security and cleaning services provided to various shopping malls owned by the Nova Group.

Nova chair Connie Myburgh previously told Moneyweb “the applications are without merit and are being opposed”.

Ownership dispute

Nell further confirmed 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.

Thumos’s only asset is the 70% undivided portion of the land on which The Villa stands, with the remaining 30% of The Villa owned by Villa Retail.

Villa Retail however 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 settlement agreement was subject to the payment of certain amounts by Villa Retail and fulfilling certain obligations.

Villa Retail has claimed the conditions of this settlement agreement were fulfilled but this is the subject of ongoing litigation.

Nell said he has given Villa Retail authority to proceed with the application, referring to it as “an old court application that stems from 2014”.

Nell 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,” said Nell.

“The litigation stood over for years but I cannot from my side as the business rescue practitioner take a decision that is part of very technical litigation.

“The advice is that Villa Retail Park Investments is a creditor but it has no voting interest.”

Related claim

When the business rescue plan for Thumos Properties 1 was published, the BRP rejected Villa Retail’s claim of R1.3 billion.

This claim emanates from Thumos allegedly causing such damages to Villa Retail, while a further R6 million claim was accepted that arose from an acknowledgement of debt Villa Retail had to sign in favour of the City of Tshwane to obtain transfer of its 30% undivided share in The Villa properties.

Nova Property Group in July 2022 alleged that Kyriacou, through Thumos 1, misappropriated about R680 million of the funds paid by Villa Retail to Thumos Properties 1 for the construction of The Villa “for his own personal benefit” as opposed to using these funds to pay GD Irons Construction and for construction of The Villa.

It said the effect of this is that Villa Retail has a claim of about R680 million against Thumos 1 and Kyriacou in his personal capacity, in addition to its claim for the transfer of the further 50% undivided share of The Villa.