National department of housing thubelisha homes voluntary liquidation
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National Department of Housing Thubelisha Homes Voluntary Liquidation. Closure Progress Status Report 19 February 2014. Outline. Terms of Reference Background “Voluntary Closure” in Context Overview of Progress to Date Settlement with Provinces Staff Matters Legal Matters Other Matters

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National department of housing thubelisha homes voluntary liquidation

National Department of HousingThubelisha HomesVoluntary Liquidation

Closure Progress Status Report

19 February 2014


Outline
Outline

  • Terms of Reference

  • Background

  • “Voluntary Closure” in Context

  • Overview of Progress to Date

  • Settlement with Provinces

  • Staff Matters

  • Legal Matters

  • Other Matters

  • Financial Position

  • Outstanding Matters


Terms of reference
Terms of Reference

  • This presentation sets out a synopsis of the closure process for Thubelisha Homes as contained in the Close Out Report dated 31 March 2012

  • The presentation has been prepared by Learning Strategies on request from the National Department of Human Settlements

  • Learning Strategies responded to an invitation to tender for the closure of Thubelisha and Servcon and was selected by the then National Department of Housing (NDoH) to facilitate the closure of Thubelisha Homes


Background
Background

  • The NDoH set about the establishment of the Housing Development Agency (HDA) in 2008 to acquire, develop and release suitable land for housing development

  • Some of these functions were previously performed by Thubelisha and Servcon

  • A decision was taken by the NDoH to close these entities and service providers were appointed to facilitate the closure process

  • Learning Strategies was appointed to assist with the Thubelisha Homes closure process as a voluntary liquidation of the company

  • The closure process has extended over a number of years due to practical and legal constraints, including delays and difficulties in reaching settlement with Provincial Departments and creditors, re-deployment of the staff of the company, alienation of land registered in the name of the company and numerous other constraints and decision delays

  • The company was placed in Voluntary Liquidation on 29 March 2012

  • This report presents an overview of the closure process and the accomplishments to date as well as the outstanding matters to be finalised before final liquidation can be granted


Voluntary closure in context
“Voluntary Closure” in context

  • Any company can be closed voluntarily by its shareholders/directors or in terms of its Memorandum of Incorporation

  • This assumes that the company will settle all its liabilities in this process

  • If there is a shortfall between assets and liabilities then the company would face forced liquidation unless alternative funding is available

  • The closure of Thubelisha is a voluntary winding up of the company which assumes either the company can settle all its liabilities or that Government will fund any shortfall

  • Voluntary closure can be accomplished by ceasing to trade/operate, disposal of assets, settling liabilities and terminating all commitments including obligations to staff

  • The company must be free of all assets and liabilities and cannot be finally liquidated until assets and liabilities are disposed of

  • As a Non Profit Company, any surplus remaining after the closure of Thubelisha will need to be applied in terms of the companies Memorandum of Incorporation, normally for a similar purpose as that of the company before closure


Overview of progress to date
Overview of Progress to Date

  • 2008- Decision to close Thubelisha and Servcon

  • March 2009 – Closure Plan accepted

  • July 2009 – Operations of Thubelisha discontinued and voluntary severance packages offered

  • Aug 2009 to March 2010 – Thubelisha Closure Team in place

  • March 2010 – CEO resigned and Closure Team terminated

  • March to June 2010 – Redeployment of remaining staff

  • 2010 – All contracts terminated and all moveable assets transferred

  • 2010 and 2011 – Reconciliation and settlement with all Provincial Departments

  • 2010 and 2011 – Legal matters defended and settlement with creditors

  • 29 March 2012 – Placed in Voluntary Liquidation

  • 20 July 2012 – Liquidator appointed

  • 2012 and 2013 – Remaining contractor dealing with land transfers


Settlement with provinces
Settlement with Provinces

  • All projects were terminated by 31 March 2010

  • Detailed reconciliations were negotiated with all Provinces

  • Settlements were agreed with certain contractors where liability could be proven

  • All funds remaining with Thubelisha were returned to Provincial Departments as part of the final settlement

  • There are no further or on-going responsibilities between Thubelisha and Provincial Departments


Staff matters
Staff Matters

  • The closure process was accomplished without any forced retrenchments as per the Minister’s requirements

  • Voluntary severance packages were paid in July 2009

  • Some staff redeployed to the HDA in July 2009

  • Balance of staff were eventually redeployed to Provinces or the National Department between March and June 2010

  • All redeployed staff initially received 1 weeks pay per year of service as a partial retrenchment and compensation for redeployment. This was paid in August 2009

  • In order to align the retrenchment packages between Servcon and Thubelisha, an additional week per year of service was paid in March 2010

  • There are currently no staff employed by Thubelisha


Legal matters
Legal Matters

  • Various legal matters have been dealt with during the closure process

  • All have been settled or successfully defended as required. Key matters include :

    • Verern Construction – Liability agreed and settled

    • Stimela Developers – Claim by KZN Contractor for loss of profits – Defended as claimant could not prove the claim

    • Sobambisana – Claim and counter claim agreed and settlement achieved with assistance of Western Cape Provincial Government

    • Ibuyile – Claim and counter claim agreed and settlement achieved with assistance of Western Cape Provincial Government

    • Dirkale – Liability agreed and settled

    • Chatty 600 Emerging Contractors – Settlements agreed by negotiation

    • Western Cape Provincial Government – no formal claim submitted. Detailed account of reconciliation provided

    • Metro Builders – Claim intimated by Metro but never submitted to Thubelisha. Thubelisha has never had a contractual relationship with Metro Builders.


Land transfers
Land Transfers

  • The land transfer issue is the single matter still delaying the final liquidation of Thubelisha

  • The company cannot be liquidated until all land registered in its name is transferred

  • There were a total of some 700 stands originally identified

  • After initial transfer, 323 problematic stands remained

    • 149 have been transferred

    • 37 more are ready for transfer

    • 102 stands in Doornkop, Gauteng, are held up pending the lifting of a moratorium on transfer due to stands being below the flood line

    • 54 stands in Khayelitsha, Western Cape, are held up by the City of Cape Town refusing to issue rates accounts or certificates

    • 4 vacant stands in Khayelitsha are actually roads and need to be dealt with by the City

    • 12 more stands in Cape Town have to be sold and transferred



Other matters
Other Matters

  • All assets of the company (mainly furniture and computer equipment) have been recovered and distributed to schools, the HDA and Provincial Departments

  • All contractual relationships have been terminated with the exception of IT services and a printer rental which will be terminated once all land is transferred

  • The company no longer incurs any other monthly costs for facilities or offices and makes use of an office at the service provider at no cost

  • Thubelisha overpaid PAYE in the final month before closure in the amount of R 1 074 665. SARS has acknowledged this liability but has not returned the funds


Financial position
Financial Position

  • The Financial position of Thubelisha at the time of closure was precarious with significant losses recorded and substantial liabilities anticipated

  • The closure process has successfully negotiated settlement of all liabilities and reached agreement with all Provinces on the project reconciliations and return of remaining funds

  • The closure process also negotiated approval for implementers fees and project management fees amounting to R 142 m

  • The result is that Thubelisha has been able to cover all of its closure costs (except for specific closure grant funding of R 16,2m) and convert an accumulated deficit of R 166m into an accumulated surplus of R 46.4m

  • The Financial results and annual report have been audited on an annual basis during the closure process with no adverse audit findings

  • The historical and current results for Thubelisha during the closure process are set out below




Outstanding matters
Outstanding Matters

  • The remaining closure matters are

    • Finalise transfer of land still registered in the name of Thubelisha

    • Collect overpaid PAYE from SARS

    • Return retained funds to the KZN Provincial Department of Human Settlements

    • Agree distribution of remaining funds and prepare final liquidation accounts

    • Submit liquidation and distribution accounts to the Master of the High Court and receive final Liquidation Order

    • Distribute funds and close bank accounts

  • The finalisation of this process is dependant on the co-operation and assistance of the City of Cape Town, the City of Johannesburg and the Gauteng Province for the finalisation of the land transfers


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