- Embattled retailer Steinhoff has proposed a settlement for those with claims against it, but Christo Wiese’s claim is being disputed.
- Conservatorium is taking Wiese to court in Amsterdam and the Western Cape in a bid to claw back €1 billion lenders had loaned him.
- Conservatorium accuses Wiese of winding up a Netherlands-based company to avoid paying back the loan.
Former Steinhoff chairperson Christo Wiese may have seen some headway made in resolving his litigation battle against the retailer, after the Stellenbosch-headquartered conglomerate last week announced it was proposing a payout of R16.5 billion to resolve the 90 legal claims against against it.
But a challenge to his own R59-billion claim against Steinhoff continues as a deal with lenders comes back to haunt him.
It has been almost three years since the Steinhoff’s CEO Markus Jooste abruptly resigned at the start of an accounting scandal that brought the group’s share price crashing down by more than 90%.
But, while Wiese is one of the largest claimants against the group, he himself is the subject of a separate court challenge.
A US company, Conservatorium LLC, has taken him to court in the Netherlands and the Western Cape High Court.
Conservatorium is the legal successor to lenders, having acquired 93% of the claiming rights of a consortium of banks that included Citibank, Goldman Sachs and HSBC last year, that provided Wiese-owned companies a €1.6-billion non-recourse loan to purchase 314 million shares in Steinhoff in 2016
The Wiese companies that the lenders entered into the agreement with are Thibault, Upington Investment Holdings and Titan, according to Conservatorium court documents.
Thibault is part of the R59-billion claim in relation to the R34.7 billion it alleges to have lost in the Pepkor shares Wiese exchanged for Steinhoff shares, due to the price not being the true value because of the accounting dishonesty at the company.
Steinhoff is a majority share holder in the retailer, owning 71% of the company.
In 2014, Wiese had exchanged his stake in Pepkor for shares in Steinhoff.
According to Conservatorium’s court documents filed in May on the Western Cape High Court, Upington was a company registered in the Netherlands that held the Steinhoff family shares, including those of disgraced former Steinhoff executives, CEO Markus Jooste, former CFO Ben La Grange and former company secretary Stephan Grobler.
The consortium of banks lost €1 billion as a result of Steinhoff’s decline.
However, Upington, which Wiese owned 89% of, was quickly wound up in 2018 and the lenders were not informed, according to Conservatiorium court documents.
The company then sold its assets, including claims, to Titan.
Upington was collateral for the €1.6-billion loan and had pledged shares and claims as security of more than 750 million Steinhoff shares, which the lenders have not been able to claim since Upington has been winded up.
“The Cession and Sale were concluded to divert claims away from Upington’s creditors, and to unlawfully and wrongfully deny the lenders of their rights to enforce Upington’s claims,” Conservatorium said in the court documents.
The consortium of banks said they would not have financed the loan, had Steinhoff itself provided accurate and complete financial information according to Conservatorium’s court documents.
In December last year, Conservatorium approached the Amsterdam District Court to have the liquidation set aside.
The judgment on the matter is pending, but Conservatorium is forging ahead and has also headed to the Western Cape High Court to assert its claim to shares that had been transferred to Steinhoff in South Africa.
‘They have a baseless claim’
It is also trying to intervene, in the same court, in Wiese’s claims against Steinhoff to ensure that its interests are protected.
“Conservatorium takes the view that it, and not Wiese, is entitled to the proceeds from any and all claims related to the shares which were pledged to the Lenders as collateral for the loan which Upington used to acquire the Steinhoff shares in 2016,” said Conservatorium’s legal advisors Michael-James Currie and John Oxenham of Nortons Inc.
However, a defiant Wiese is fighting back.
“We deny all their claims, we’ll resist it vigorously. They have a baseless claim,” he said on the phone on Friday.
As for winding up Upington, Wiese said he had not informed the lenders because it didn’t affect their rights.
“But I don’t want to discuss these issues, it’s litigation issues,” he said.
However, his battle with Conservatorium could be costly for Wiese.
In its settlement term sheet, Steinhoff said that with regards to any disputes about legal ownership, amount or value of a claim against it: “…will wait for the final unappealable determination, or consensual resolution, of those disputes before paying any compensation to the owner of the claim.””
The company added that it would dispute the claims made by Conservatorium stemming from the Upington matter.
“Conservatorium… remains confident that it will ultimately succeed in demonstrating its entitlement to the proceeds of all of its claims and will continue with the current litigation proceedings until such time as there is a fair and workable settlement proposal on the table,” said its legal advisors.
On Friday, Steinhoff said it would not comment beyond the information it had published in its annual results regarding the litigation.