Embattled construction group Sanyati Holdings on Tuesday halted the business rescue proceedings of Sanyati Civil Engineering and Construction (SCE&E) and proceeded with the liquidation of the unit.
This followed the conclusion of appointed business rescue practitioner Trevor Murgatroyd that there “no longer exists a reasonable prospect of rescue” of Sanyati, which was dependent on the trading, income and profitability of SCE&E.
“The business is no longer able to continue operating as it can no longer meet its critical payment commitments. Under the circumstances, SCE&C is factually and commercially insolvent and is clearly no longer able to trade without independent financial assistance and unable to pay its debts,” the company said in a statement.
Sanyati’s existence is predominantly dependent on the income and profitability of the SCE&C, Malcolm Lobban, former Sanyati Holdings CEO and SCE&E MD, said in an affidavit in support of the business rescue application.
Lobban implemented business rescue proceedings in May as the company entered financial distress when a number of government departments failed to settle in excess of R70-million for contracts completed over a year ago.
The business rescue practitioner tabled a proposed overall business restructuring plan, which included rationalising expenses, ringfencing viable projects, disposal of parts of the business, disposal of certain contracts, entering into of joint ventures in respect of certain contracts, cancellation of unviable contracts and raising of capital.
But, the company said that the “absolute minimum” critical short-term cash flow requirements to keep the business afloat while implementing the rescue plan would reach about R32-million.
Sanyati Holdings would remain under business rescue proceedings for the time being, but no indication as to how long was given.
Meanwhile, shortly after the resignation of Sanyati CEO Lobban in June, CFO and financial director Alta Jovner resigned, effective July 6.