The High Court has ordered that the liquidation of the Bluthorn "family of companies" proceed, moving creditors closer to recovering more than P200 million owed after a unit trust investment scheme collapsed.
Engelbrecht and Sibisibi also own Bluthorn Holdings, the majority shareholder in Bluthorn Fund Managers, the firm which ran the unit trust investment scheme. Most of the investors in the unit trusts were district councils, who encountered problems when their investments were not paid after reaching maturity. Previous investigations by a statutory manager engaged by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) found that investments made into Bluthorn Fund Managers (BFM) had been irregularly diverted into loans across the family of companies, in some cases appearing to fund the personal appetites of key shareholders.
Thekiso, the liquidator of BFM, sought to bundle the companies into a single liquidation, enabling more scrutiny into the transactions and enhancing the ability to recover whatever is available to creditors. In his ruling dated January 13, 2022 Justice Leburu said the complex cross-ownerships and dealings between the various companies made it pertinent to have them bundled into a single liquidation. “It is clear that funds invested on behalf of creditors of BFM were so intermingled and co-mixed with the business operations of the companies within the group, such that it is impossible to determine which creditor’s money was used for which transaction by which company,” he said.
He added: I also embrace the findings of the statutory manager where he stated that these companies are so closely related such that transactions among them were akin to ‘brothers and sisters sitting at a family table and exchanging money between themselves”. Of the four companies in the suit, only B Thorn Pty Ltd challenged Thekiso’s application both on its urgency and also on matters of merit.
However, in a comprehensive judgement, Leburu agreed with Thekiso’s argument that a scheme existed where BFM collected investment funds and redirected these to Bluthorn Procurement Solutions (Pty) Ltd, Prime Employee Benefits (Pty) Ltd and Bluthorn Holdings. “The said respondents would then lend the funds to various investee companies.
These investee companies have not repaid the funds to either the statutory manager or the two provisional liquidators of BFM,” the judge said. Irregular loans of investors’ funds were made and the judge noted an attempt to cover these up through back-dated ‘agreements’ between the companies. The court agreed with Thekiso’s finding that Engelbrecht is living in Lion’s Park in a P10 million home bought by investor funds without paying rent. Leburu said bundling the companies into a single liquidation would help Thekiso establish the money trail of investors’ funds.