‘We are not delaying the HS legal proceedings, the HSAG is’ – Klopper

Hans Klopper, the business rescue practitioner (BRP) of the Highveld Syndication (HS) companies, has disputed various statements Johan Stander, a representative of the Highveld Syndication Action Group (HSAG) made during a recent interview on RSG Geldsake.

In a status report Klopper sent to investors, he questioned Stander’s statements that the case for the setting aside of a scheme of arrangement (SoA) would be heard in January next year and that the respondents in the case are to blame for the nearly 10-year delay in bringing the case before a judge.

Read: Highveld Syndication saga: Class action continues a decade later

Background

In the late 2000s, around 18 700 investors jointly invested around R4.6 billion in the HS schemes.

However, the HS companies fell into financial distress in 2011 and were put into business rescue. In 2014, a Section 155 SoA tasked a company, Orthotouch, and its underwriter Zephan, a company owned by the late Nic Georgiou, to repay investors.

However, a group of investors claimed large-scale fraud was involved and formed the HSAG, which launched an application for the certification of a class action and for the SoA to be set aside.

The HSAG is represented by the legal firm Theron and Partners.

Klopper disagrees

Klopper rejected Stander’s statement that the setting aside application will commence in January, stating that the hearing relates to the HSAG’s application to transfer the case from the Johannesburg High Court to the Pretoria High Court.

The HSAG initially applied for the transfer in the Pretoria High Court.

“Upon realising they were in the wrong court, they re-launched another transfer application out of the Johannesburg court. It is this matter that will be heard on 22 January 2024 and not the actual setting aside application as was falsely stated by Stander during the radio interview,” Klopper wrote.

Klopper stated that a court date has not been allocated for the hearing of the setting aside application.

Delaying of legal proceedings

Klopper also addressed Stander’s statements that the respondents have delayed legal proceedings.

During the interview, Stander said, “As far as I am concerned, these delays lie squarely at the opposition’s door.”

Stander said the implementation of the SoA delayed the legal proceedings.

He also referred to a case where Georgiou “bought off some of our applicants on condition they withdrew their claims”.

“Through that action alone, we had to approach the Supreme Court of Appeal, which has kept us occupied for three years.”

Read:
Georgiou attempts to ‘hijack’ Highveld Syndication class action
Georgiou tried to ‘sabotage’ investors’ rights

Klopper, however, blamed the delays on the HSAG. He said the respondents were ready to proceed with the Derivative Class Action (DeCA) case on 30 May last year, but the hearing was delayed when the HSAG applied for Orthotouch and the HS companies to fund the application.

“The belatedly launched ‘funding application’ by the applicants was one of the main reasons why the case could not commence on 30 May 2022,” said Klopper.

“At the time, the applicants had more than a year to launch the application, yet they decided to do so a mere five court days before the matter was to be heard.

“Their legal team and Stander, as he did in the radio interview, however, persist with the false narrative that all the other parties, including the BRP, are applying ‘delaying tactics’ for the matter(s) not to be heard.”

Read all of Klopper’s status reports here.

HSAG response

Jacques Theron of Theron and Partners, the HSAG’s legal representative, responded to Klopper’s status report and said Stander’s reference to the 22 January hearing is significant in legal proceedings involving Klopper, as he is the first respondent in the DeCA case.

“The DeCA case involves the misappropriation of billions of rands from HS funds, implicating Klopper.

“This explains his attempt to separate it from the application for setting aside of the SoA in which he is indemnified.”

Theron said the 22 January 2024 application for transferring the setting aside case to the Pretoria High Court “is significant in these proceedings”.

“If successfully transferred to Pretoria and combined, the setting aside application will jointly proceed with DeCA in May 2024, together with the funding application. If the SoA is set aside, it does not bode well for Klopper, as he will lose his indemnification, which is why he is making such a big issue of the 22 January court date.”

Theron denied Klopper’s assertion that the HSAG is responsible for the delays.

“As reported in previous newsletters, the HSAG is not responsible for court case delays. Delays largely stem from the respondents’ actions, filing, and opposing interlocutory applications, leading to confusion and prolonged legal processes. Unforeseen events like Covid-19 in 2020/2021 and the subsequent passing of Nic Georgiou and his executor also contributed to lengthy delays.”

Theron also denied that the postponement of the DeCA case was due to the funding application.

“The postponement of the hearing of the main application in DeCA resulted from the death of Nic Georgiou’s executor, mandating a replacement. The presiding judge refused to hear the case with one party not being represented and directed that a new executor be appointed before she would hear the matter, emphasising the importance of adhering to legal procedures. Additionally, the matter was scheduled for early 2024, but due to the unavailability of Klopper’s legal team, the first available date was only in May 2024.”