Developer in the soup
07 Mar 2013
Ingrid Oellermann and Lunga biyela
AN upmarket Pietermaritzburg property developer facing bankruptcy is looking to Gauteng for salvation.
Victoria Country Club Estate (Pty) Ltd (VCCE), set up by Riel Associates (Pty) Ltd to develop a vacant piece of land on the Victoria Country Club Estate, was yesterday provisionally liquidated in the Pietermaritzburg high court.
However, the luxury Victoria Country Club Estate, situated in the scenic parklands adjoining the Queen Elizabeth Nature Reserve, was not affected, said Riel Associates CEO and VCCE director Richard Kelland.
He confirmed that VCCE had been provisionally liquidated over a debt of about R7 million owed to Nedbank. “There are fears that this means the estate itself has been provisionally liquidated.
“This is not the case,” he told The Witness. He said that VCCE was a separate company, launched to develop apartments and simplexes on a 7,6-hectare portion of land on the 78-hectare estate.
In order to do this, VCCE took out a short-term construction loan before the global economy went into crisis, said Kelland. “This left a shortfall in the construction loan,” he said, adding that Nedbank had given VCCE “a generous amount of time” to settle the debt, to no avail.
“Despite many attempts to attract funding and investment into the development, including the launch of a retirement village in 2009, VCCE has been unable to successfully launch a sustainable development in the depressed residential market.”
Light appeared at the end of the tunnel in the form of a Johannesburg property development consortium. Kelland told The Witness that the consortium, “with financial backing to successfully sustain investment”, intended to develop 100 apartments and 60 simplexes on a portion of the property over the next five years.
But “a few outstanding issues” proved to be an obstacle for the development on the land.
“Chief among those issues are demands from the municipality for rates and sewerage payments on the raw, vacant land subdivisions comprising of 6,4 hectares.”
This had halted the process, leading Nedbank to bring an application to wind up the company on the grounds that it was unable to pay its debts and was in fact insolvent. A similar application was made in June last year.
At that stage, VCCE owed Nedbank more than R8,7 million, and was also indebted to other institutions including Msunduzi Municipality. The liquidation was put on hold while a business rescue plan was put into operation.
Attorney Andrew Donnelly, representing Nedbank, said yesterday that the business rescue had not succeeded, leading to yesterday’s application, which was granted by the high court.
However, Kelland said he was optimistic that the sale of the land to the Johannesburg consortium would be concluded in good time.
The provisional liquidation order granted yesterday allows for a period of four to six weeks before being made final, time Kelland and his partners are confident will be sufficient to conclude the rescue.
“The development of these residential units on a portion of Montrose Park Village in the successful Victoria Country Club Estate will go ahead,” he predicted.