October November December 2022 Status Report

Business Rescue Status Report 

ORTHOTOUCH (PTY) LIMITED (“the Company”) REGISTRATION NUMBER 2010/004096/07

ZEPHAN PROPERTIES (PTY) LIMITED (“the Company”) REGISTRATION NUMBER 2003/020174/07 

To Whom It May Concern,

The Companies Act 71 of 2008, as amended, and more specifically section 132(3) thereof, provides that where a company’s business rescue proceedings have not ended within three months after the start of those proceedings, the practitioner must prepare a report on the progress of the business rescue proceedings and update it at the end of every subsequent month until the end of those proceedings. The report must be delivered to all affected persons.

BUSINESS RESCUE PROCEEDINGS:

1. Commencement of Business Rescue: 7 November 2019.
2. Appointment of Business Rescue Practitioner (BRP) – J du Toit: 14 November 2019.
3. First Meeting of Employees: 27 November 2019
4. First Meeting of Creditors: 28 November 2019
5. Business Rescue Plan filing date: 31 March 2020
6. Special creditors meeting: 10 January 2023 via MS Teams (please see link in the body of the report).

BUSINESS PROGRESS

1. General
   1. I refer to a newsletter which was circulated by Helgard Hanke. I wish to confirm that I will assist as far as reasonably possible in any investigation launched with the facts to my knowledge.
   2. I refer to the circular of Michael K, whereby it was stated that certain information was provided to me for investigation purposes, and he confirms that I, as BRP, have not taken any steps in regard to the investigation of the information provided to me. I can confirm that this is NOT correct as my attorneys are reasonably far advanced with the investigation.
2. Continuance of the Business
   1. I can confirm that I am constantly engaging with the officers of Orthotouch and Zephan in ensuring the continuance of the business in the absence of Nic Georgiou.
   2. The shareholder trust has identified the replacement director and the appointment is in process.
3. Properties
   1. We continue to have full control over the properties.
   2. We have restructured the admin duties and functions. DTB has appointed an independent management company to oversee the remaining properties which has already shown an increase in monthly income. We continue to engage with them in regard to the running of the properties and the collection of rental income.
   3. We have received various offers to purchase on 3 properties in the value of R11 200 000.00 (excl. VAT) and we are in the process of the sale and transfer of these properties.
   4. We are looking at selling the properties due to the income and expense on such properties not being viable, especially on the Weltevreden Park Property seeing as the 2 portions currently being sold are vacant.
   5. We have received an offer to purchase on the Goldwill Property with the purchaser looking to occupy a portion of the property.
4. The appointment of an Executor for the Estate Late of Nic Georgiou was appointed and I am engaging with the Executor representative to the extent that may be necessary. The original executor has passed away, but the new appointment has taken place.
5. Proposer Involvement
   1. In terms of the proposed business rescue plan regarding the issuing ofshares as an option in the Business Rescue Plan, I wish to confirm that I have engaged with the representative of the proposer who gave me their commitment that they are committed in making the shares available as a payment method to purchase claims as proposed in the BR Plan.
   2. Such commitment has been confirmed in writing in February 2022.
   3. The Proposer will be FICA’d by an independent law firm as well as auditing firm to ensure its independency, this will include ensuring that the Proposer has sufficient means to offer said shares.
   4. The Proposer will buy shares and deposit them into a vault on the Compushare system, from where they will be released to creditors should acreditor chose to sell their claim. This option will only be available upon the approval of the BR Plan and sanction by a court.
   5. Negotiations regarding the online portal which will be used for the verification of creditors and will allow them to sell their claim in exchange for shares if they wish to, has been completed and a draft portal has been constructed. The legal team is currently verifying the process and the documentation surrounding same. This same online portal will be used for the voting process regarding the Business Rescue Plan.
   6. Once this system is in place, notifications will be issued to all creditors with instructions on how to proceed.
   7. A demo version of the online portal nears completion and information regarding the investors to be used in the portal is being consolidated.
   8. I embark in the online process to go live in January 2023.
6. Business Rescue Plan and Process
   1. Now that the declarator judgement has been received, I will continue in finalizing and redrafting a revised plan.
   2. I have, in the meantime, finalised a list of creditors inclusive of Option 1, 2 and 3 SOA creditors, which include the buy-back creditors.
   3. The repayment of the creditors’ claims, once vetted through the online portal, will be done through the issuing of Accelerate Shares.
   4. The shares will be made available on the Compushare account, which will be under my control, once the Plan has been approved and sanctioned by the court.
   5. A special creditors meeting has been convened for Tuesday, 10 January 2023 at 11h00. All creditors will need to discuss, determine and vote on the timelines moving forward. This meeting will also expand on the vetting of the claims process. Please take note of the link to the meeting on the 10th January 2023 at 11h00:
7. Auditing
   1. As previously stated, we are permanently engaging with the auditor in finalising the financial statements.
   2. The auditor is constantly in the process of updating the AFS to get same up to date. My advices in this regard will follow in due course.
   3. It is our intention to finalise the AFS to date as soon as possible.
   4. We are currently engaging with SARS on this matter however we need to finalise all financials to date before we can file the AFS for Orthotouch and Zephan.
   5. For both Orthotouch and Zephan to be updated, the shareholders and the connection to the shareholders also need to be updated as a group to finalise the intercompany loans and group entities in conjunction with the Companies.
8. I continue, as always, to exercise my duties as Business Rescue Practitioner and remain in control of the businesses and assets of the Business Rescue Companies.

LITIGATION

1. As advised in previous reports, certain attorneys persist with litigation in blatant disregard of the provisions of Chapter 6 of the Companies Act, and the moratorium against legal action as regulated by Section 133 of the Companies Act. I will continue to vigorously oppose and defend any legal action duly represented by the Companies’ legal team where the rights of the creditors will be detrimentally affected.
2. Please see the below link to the various litigation matters which is currently ongoing: Letter dated 10 March 2021 in regard to the Declarator:
   https://1drv.ms/b/s!Aq7VguEjA8oSg4RV47GmOtzsPTv9_w?e=CTfni5
   Letter dated 12 March 2021 in regard to the ongoing litigation matters:
   https://1drv.ms/b/s!Aq7VguEjA8oSg4RZ_jnAvfHWar5oFA?e=BILJgD
3. The “Black Application”
   1. This application is in regard to a group of creditors looking to attach funds held by the receiver in the previous Scheme of Arrangement.
   2. Such funds are currently under my control in an investment trust account which is held by attorneys in the amount of R 1.2 million.
   3. We are opposing such application as I am of the opinion that the funds belong to ALL creditors and not only a small portion of the creditors.
4. CLASS ACTION LITIGATION
   1. Litigation continues with the Applicants and Respondents having to file papers according to set timelines whereafter a court date shall be applied for the application to be heard. Theron filed a notice to postpone to a date to be set and the court afforded such extension.
   2. Currently, we received notice that the application to set aside the SOA is being revived by Theron Attorney’s. Kindly note that if such setting aside application is successful, any funds paid during or after the SOA commenced will be at risk to be claimed from the Investors receiving such funds.
5. DECLARATOR APPLICATION AND PROCESS GOING FORWARD.
   This application was for the purposes of obtaining clarity in regard to the applicability of the Scheme of Arrangement and the rights of the creditors going forward and not a judgement against any affected party.

   The judgement was received on Thursday, 8 December 2022. Please see the below link to the judgement:
   https://1drv.ms/b/s!Aq7VguEjA8oShqQ3e39OgQXayCBqhA?e=npBSWS
   The reason for the Declarator Application was as follows:

   1. For me to complete the BR process, I must have a valid voting process.

   2. There were various opinions from different parties in regard to:

      1. that the buy-backs are not valid irrespective of the SCA ruling as the SCA did not take the cession of claim in consideration

      2. The rights of all investors were ceded in terms of the SOA

      3. The Receiver in terms of the SOA needs to vote

      4. in the light of the aforementioned, where does the claim originate from, who has a claim, what is the claim namely, buy back or cession

      5. If a buy back, then most of the claims prescribed in law

      6. if in terms of SOA there is different options of election determining different
         claims

      7. Further difficulty is that the Receiver resigned, and I sought clarity if I needed to appoint a new Receiver, which is also lacking. I may be missing something in the judgement and I will make further decisions after properly assessing judgement and obtaining legal advice.

   3. For me to prevent any later disputes and or litigation delaying the process to the detriment of Creditors any further, I approached the court for clarity on my way forward.

   4. I had/have no intention to act to the detriment of the Creditors/Investors, to the contrary I am trying my best to bring certainty and clarity within the ongoing litigation between various parties.

   5. Unfortunately, the Judge interpreted my intention incorrectly and did not give much clarity on the way forward, except by confirming that the claims were ceded, which give rise to more legal questions which I will have to engage with my legal team on.

   6. My currently feeling is to include all remaining Creditors/Investors in my plan and let everyone proof their claims and let everyone be part of the process, to ensure that no one is excluded.

   7. The vetting of claims in terms of law will be followed and with the lack of clarity as was the intention of the declarator I will have to adjudicate the claims and proceed.

   8. My application was not to get a judgement against any affected party but purely to seek the courts advice on which route to follow, my concerns were placed in front of court which posed a difficulty in completing the BR process. It was clearly stated that I will abide by the court ruling whatever it was but expected more clarity from court.

   9. I will immediately, seek legal advice, and continue with the planned process in finalising the BR.

While waiting for the declarator judgement, I, as BRP, finalised the Creditors lists from the original Investors, including the Option 1,2 and 3 SOA Creditors, which of course include the buyback creditors. I, furthermore, embarked on an IT based administrative process through which each and every creditor needs to register through, verify their identity and their claim for adjudication. The aforementioned process has been completed and will go live in January 2023.I will advertise widely regarding the process.

I shall now, after the judgement, reassess and redraft the published plan which will be made available on the same IT data base which will also be used for voting purposes going forward. The repayment of creditors vetted claims will be as previously stated be done through the issuing of Accelerate shares. The agreement with the party who will be making the shares available have been completed but stayed unsigned pending the declarator judgment. The shares will be made available on the Compushare account under my control for issuing when the BR plan has been approved and sanctioned by court. Kindly note that Creditors will vote in their personal capacities on the IT data base which make the identity of the proposer of the shares irrelevant, I honestly do not care who puts up the shares as long as we get return to Creditors. The Creditors needs to vote in favour of the return offered or liquidation will be the end result.

I still need to engage with the BR team and the legal team whereafter we will present the Creditors with a timeline. Note that the BR process will only address the Orthotouch and Zephan claims and will not jeopardise the rights of Creditors against any other 3rd party.

As a result of the judgement, I will need to embark on a period of allowing the claims to be vetted and then publish a revised plan.

I will, however, need to convene a creditor’s meeting by giving notice to all known Creditors and vote on the timelines going forward (as stated above). Taking the current time constraints of the festive season and to commence with the processes into consideration, the Creditors meeting will be proposed for the 10 of January 2023 (as stated above).

The Litigation status report, in terms of the Companies Act, pertaining to all litigation matters has been published in terms of the Companies Act and is available via the Orthotouch *website.

WWW.ORTHOTOUCH.CO.ZA

HIGHVELD SYNDICATION INVESTORS / SHAREHOLDERS:

For all enquiries relating to investments, the following contact details are available:

Administrative Manager: Sanja Elzerman admin@orthotouch.co.za

Yours faithfully

Jacques Du Toit
Director & Senior Business Rescue Practitioner
DTB Business Rescue
B.Proc, Dip. Tax, Attorney, Notary, Conveyancer