Busy, busy, busy, busy

Well, I turned my back on you for a few days, and look what the results are: heaps of things. Articles, letters and rumours.
Today I wanted to tell you a fairy tale about the big bad wolf, Patrickinov in the kingdom of Edwafinia. Of course there are faeries, real ones called Carolina, Donitia, and Ronella. There was a mother-boss-faerie, Veronella, as well, but I have no idea what happened to her - eaten perhaps? by the wolfettes?

Anyway the tale will have to wait until tomorrow, when it arrives, possible and perhaps. not.

Although I try to live only for the moment, things don't easily pass me by. It was thus that I discovered that the snail had been busy in my cabbage patch again, and continued teir slimy path to a slow and painful dissolution caused by Slugem (thanks to anonymous for that hint/ Now what can I do about my marauding dogs?). Yes, of course, it was Carole who retracted her retraction and allowed good old Marc, the "siccer", to publish her statement. Thus we snail slitherly along. Of course, brother Patrick was not happy by the snailing of Carole, and decided to do some slimery of his own. Now to the tune of "Under the Shine of the Moon":

Slithery, slidery, slimy me,
Tell my tale to set me free.
I do not retract, I do not detract,
All I do is not state the fact.

Slithery, slidery, slime you,
Let's tell stories and make them blue.
It is not me, it's you, you and you,
Now we know they don't have a clue.

OK. I was going to discuss the words of our friends a bit today, but there are too many documents and things to show and tell you.

First off, we have the first official circular from the liquidators. It is basically the same as the preliminary circular from a few weeks ago. It tells us that Edwafin has no money, and that if we want them to pursue possible criminal investigations, we possibly have to pay them a bit more. Now, Now, pick yourself up from the floor and sit properly, listen to the rest. Rather, what they did not mention is what they told good old Carola: that we might have to refund some/all of our interests should they find that illegal business had been done by Mr Patrick Stapleton and close-knit family of business friends. This possibility was further mooted in an article by a certain Mr. Prakke (unfortunately, I can't find the link anymore, but I have the article on my computer should anybody want a copy):

Forensic accountant Andre Prakke says he's concerned that the liquidators will issue summons against investors to start repaying the money they received from the estate.

He warns that if the liquidators can find that new debenture holders' funds were being used to pay interest and capital to existing investors, then they might be able to argue that Edwafin was an illegal scheme.

This would allow the liquidators to issue summons against investors to recover money that was paid to them by Edwafin. The rationale is that they received this money at the expense of other investors, and it must be repaid so it might be apportioned more equitably.

Ha - Ha, you say. So they might ask us for more money, so that they can do a criminal investigation, so that they can ask us our interests back. Ha - Ha. I warned the readers a while ago that attorneys are working people, who operate within structures, and these structures may not suit you or be of benefit to you in this case. They are certainly not a replacement for your need of a saviour in your time of trouble. There is now an official website : www.edwafinliquidation.co.za. One question though: I have just returned from another reality, I think, but didn't Patrick tell us months ago that they had 4000 investors? That is why they couldn't write out so many cheques ... la di da di da, etc. Now it turns out there are only just over 1400 investors who collectively invested nearly R200,000,00. Patrick, have you been fibbing again - watch your nose my friend, it is nearly on the floor already.

For those of you who demand that we claim from the insurance: there is only R20,000,000 worth of insurance, and only the liquidators can claim against the policy at this time. Stop it now!!

In any case here is the circular:
20090611 Liquidators Circular to Creditors No 1

You thought that was all for today. I thought so too...

This is a real quick one (he said crossing his fingers behind his back).
No, this is serious.

We have a name
Firstly there seemed to be liquidators who were appointed by the court to look at the assets of Edwafin. Forgive me, but the lady who told me spoke at 157 miles per hour so I missed one of the names as well as some of the other stuff she told me. We all accept that he is important in this matter and will discover his name soon enough. The other is Mr Eugene Nel (I think she said of Ber(r)inger Inc.). I have his addresses and phone number but would first like to get his permission to share it with you. I tried to look them up on the Internet, but Beringer seems a name closely associated with wine and underwear, so I suppose I didn't find it.

Quack Quack
Other news is that I received an urgent message from one of our co-investors telling me that all the remaining Edwafin staff has been moved to the DMC factory in Pietermaritzburg. Of course there is currently a lot of space in the factory now, since it seemed to be nothing more than an empty shell. Now why would old father Patrick waddle his chicks over to PM? Since I have made a new friend in Pietermaritzburg I'm all for the place but surely DMC is a subsidiary of Edwafin, and Edwafin is under provisional liquidation. Huh? Should anybody still be Edwafin at all? Sniff-sniff, there is a slight tinge in the air.

In my search for Mr Nel, I found an interesting article. yes, it states a price of R25.00, but because you take the trouble of reading this blog, I'll give it to you free. This is an extract (Eric Levenstein: AIPSA NEWS, March 2008) The complete newsletter is found here:

PERSONAL LIABILITIES OF DIRECTORS

The personal liability of directors is becoming an emotive and important issue for directors sitting on boards in South Africa. The topic has gained momentum amid talk of a new King Report (the third version, King 3 ), amendments to the Companies Act and general concerns
on the part of directors concerned with incurring personal liability. The prestige of holding numerous non-executive directorships is being overshadowed by the increased personal vulnerability to which it exposes directors, particularly those who lack the requisite experience or time to fulfil their fiduciary obligations to companies on whose boards they sit.

Two recent decisions have shed light on the meaning of incurring personal liability as a director in terms of section 424(1) of the Companies Act No 61 of 1973 (as amended). Before considering the recent developments in South Africa s case law, however, it is necessary to consider the scope of section 424(1) and its application. Section 424(1) of the Companies Act reads as follows -

'When it appears, whether it be in a winding-up, judicial management or otherwise, that any business of the company was or is being carried on recklessly or with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the Court may, on the application of the Master, the liquidator, the judicial manager, any creditor or member or contributory of the company, declare that any person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct'.

The intention of this section is to penalise any person who fraudulently or recklessly carries on or manages the business of a company with the intention to defraud creditors of the company. By recklessness , our courts have intended gross negligence with or without consciousness of risktaking. Our courts are, however, guided by the principle that a court should not lightly find recklessness. This principle was established in 1998 in Philotex (Pty) Limited and Others v Snyman and Others and Braitex (Pty) Limited and Others v Snyman and Others.

LATEST CASES - DIRECTORS PERSONAL LIABILITY
From a litigation perspective, the onus is on the plaintiff alleging fraud or recklessness in civil proceedings to prove such fraud or recklessness on a balance of probabilities.

Guidance has been given to our courts through the development of tests to establish recklessness. In 1992, Ozinsky NO v Lloyd and Others formulated the following test:

'If a company continues to carry on business and to incur debt when, in the opinion of reasonable businessmen, standing in the shoes of the directors, there would be no reasonable prospect of the creditors receiving payment when due, it will in general be a proper inference that the business is being carried on recklessly'.

The Philotex decision in 1998 refined the application of the recklessness test by signalling to the courts to have regard to, inter alia, the following factors: the scope of operations of the company, the role, functions and powers of the directors, the amount of the debts, the extent of the company s financial difficulties and the prospects, if any, of recovery .
Eric Levenstein

Shall we dance?