Ponzi Schemes: Can Liquidators Claw Back 600% of Payouts?

“MTl’s business clearly amounted to an unlawful ponzi-scheme, i.e. a fraudulent investing scam promising high rates of return to investors and generating returns for earlier investors with investments taken from later investors.” (Extract from the MTI judgment) Recent media reports of the MTI (Mirror Trading International) liquidators making repayment demands of investors highlight once again…

Directors, Creditors – Do Personal Suretyships Survive Business Rescue?

“Creditors have better memories than debtors” (Benjamin Franklin) In these hard times of pandemic and economically destructive unrest, an unfortunate number of businesses face collapse, and many will opt for the “first aid for companies” option of business rescue.    Creditors coming out of that process with a shortfall (only the luckiest creditors are likely…

Buying a Business? Make Sure the Seller Publishes Notice of the Sale

“The purpose of the legislature in enacting s 34(1) is to protect creditors by preventing traders who are in financial difficulty from disposing of their business assets to third parties who are not liable for the debts of the business, without due advertisement to all the creditors of the business.” (Extract from judgement below) With…

Directors at War and the Liquidation Option – A Tale of Sibling Rivalry

“Family quarrels are bitter things. They don’t go according to any rules” (F. Scott Fitzgerald) A company’s directors have both the power and the duty to manage the company’s affairs for its benefit. When two or more directors are in place, it’s perhaps natural for the occasional disagreement to arise between them. Indeed, regular expression…

Business Rescue: Are Your Suretyships Enforceable? A R5.5m Lesson for Directors and Creditors

“Some people use one-half their ingenuity to get into debt, and the other half to avoid paying it” (George Prentice, newspaper editor and author) You are owed a lot of money by a company that goes into business rescue. The business rescue plan provides for creditors like you to accept a dividend of only a…

Your Body Corporate and Arrear Levies: To Sequestrate or Not To Sequestrate?

“…aye, there’s the rub” (Shakespeare) Levies are the lifeblood of a sectional title scheme, and the Body Corporate has a duty to recover arrears from defaulting owners. It has the power, in addition to following standard debt collection procedures and perhaps approaching the Community Schemes Ombud for assistance, to apply for the sequestration of the…