It falls to noseweek to record yet another bad day at the office for Investec Bank's collections department. Well, not quite: in fact it was the alert Grahamstown correspondent of the Despatch newspaper in East London who last month reported that one of the companies in Sandton property developer Zunaid Moti’s Abalengani group has been ordered into provisional liquidation by the Grahamstown High Court.
Noseweek readers have long known that the flash-trash young millionaire (the Despatch calls him a “high-flyer”) Moti owes Investec more than R1bn – and that by now he has been in arrears with his monthly repayments for at least a year (noses118,119&120).
The Moti company now in provisional liquidation, is called 85 Grayston Drive Developments (Pty) Ltd as it owns the undeveloped 2954 sq m property at that Sandton address, the property is encumbered with two bonds in favour of Investec, for a total of R53m. However, it was not Investec that applied for liquidation, but Johannesburg businessman Vivien Natasen, who is owed a mere R8.8m by this Moti company.
What might be of some concern at nearby Investec House is this: If Natasen has his way, the liquidation will result in Investec’s bonds being set aside, leaving the bank to compete for its money on equal terms with Natasen and other creditors.
According to court papers, Moti had intended erecting a “very exclusive” commercial office complex on the Grayston Drive property. Natasen had wished to buy the entire third floor of the proposed building, for over R40m, and in 2006 paid Moti a deposit of R8.8m. But construction never began, and in 2008 Natasen obtained a court order declaring the sale agreement void, and ordering Moti’s company to refund Natasen’s R8.8m deposit.
In the meantime two mortgage bonds had been registered on the property in favour of Investec Bank, for R13.6m and R40m respectively. In October 2009 Investec concluded an agreement with Moti, in terms of which the bank took effective control of most of the properties owned by the Abalengani group – including the one at 85 Grayston Drive.
Investec had then proposed to Natasen that if the property was sold for an amount in excess of the R53.6m mortgage bonds, Investec would use the surplus to pay him out his R8.8m. Natasen did not fall for the ruse: he knew, he said, that the property was worth “no more than R12m” and there was therefore no prospect of recovering any money were he to go along with Investec's proposal.
Natasen argues in his court papers that the registration of the bonds in favour of Investec Bank constituted a so-called “disposition” way beyond the company's means and the value of its assets – the R53m mortgage by far outweighed the R12m value of the undeveloped property. In terms of the law, if a disposition of property was not made for the value of the property it could be set aside in insolvency.
Natasen told the court: “I submit that there are reasonable grounds to believe that, upon a proper investigation of [Grayston Drive Development’s] affairs, and in particular the circumstances surrounding the granting of mortgage bonds to the value of R53.6m in favour of Investec Bank, a liquidator may recover proceeds for disposal for the benefit of unsecured creditors or the general body of creditors.”
In a subsequent radio interview by Moneyweb’s Alec Hogg, Moti denied that 85 Grayston Drive owes Investec the full R53m covered by the bonds. The bonds, he said, had been to cover anticipated development costs, and that “only about R30m” had been paid out by Investec against the bonds. (Which also calls for explanation, since no development has taken place.)
Moti also told Moneyweb that his company and Investec – both cited in the liquidation application – had decided for “strategic reasons” not to oppose the application.
Might these reasons include that, right now, it suits neither of them to have to state anything under oath on the public record about their joint affairs? Another question for noseweek readers to ponder: why was the application to put a Sandton property company into liquidation brought in the far-away Grahamstown High Court? Answer: because the company's registered office is in the even more distant country town of Cradock.
(There's a R5 reward for the reader who comes up with the best explanation for that – Ed.) | 
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