Nedbank clears hurdle in bid to liquidate owner of Damelin and City Varsity

The Leo Chetty Group, the owner of embattled private higher education institutions Damelin, City Varsity, Icesa and Lyceum College, is closer to being liquidated.

That is after it lost its leave to appeal against the Durban high court’s decision that Nedbank might proceed with legal action without handing over documents sought by the company.

On Wednesday, the court found that the company did not present compelling arguments that a different court would find in its favour.

At the heart of the dispute is Leo Chetty Group’s application, which tried to get Nedbank to reveal certain information to it. The information it sought to gain access to include Nedbank’s internal communication, to prove that an oral loan restructuring agreement was entered into by the parties.

“Liquidation proceedings are inherently urgent. They do not, or ought not to, move at the ordinary pace that actions do, or even as other types of applications do.

“Liquidation applications are intended to be considered and finalised swiftly because they may involve an entity trading in insolvent circumstances to the prejudice of the general body of its creditors and unknowing members of the public,” the court found in dismissing the application for leave to appeal.

“Relevance is a material consideration when issues of discovery are considered. In any event, the deponent on behalf of the applicant [Nedbank] has stated that the documents sought by the respondent do not exist. I cannot order the production of that which does not exist and there is no basis for me to question the assertion of the deponent.”

The decision opens the door for Nedbank to pursue its liquidation application.

The verbal agreement claimed by Leo Chetty Group is that Nedbank agreed that for the first two years from the conclusion of the so-called restructuring agreement, only interest would be paid on the debt.

Nedbank has denied that such an agreement exists.

It aims to recoup nearly R50m in unpaid loans dating back to 2016 and has launched proceedings to liquidate several companies in the Leo Chetty Group.

The company, which also owns properties, has argued that due to the Covid-19 pandemic in 2020, its colleges were unable to conduct their regular business as students were prohibited from attending lectures or staying in their residences.

It said this situation meant it could not refinance its loans as the fallout from the pandemic had dealt a serious blow to the financial stability of the group, and the effect on its finances continued to linger long after the pandemic had subsided.

The group’s private higher education business, housed under the Educor brand, was already in a precarious position after the government deregistered the institutions in March, after the group failed to submit proof of its financial viability to the department of higher education and training.

The department has assured students that the qualifications from Educor institutions, issued or obtained during the period of registration, would remain valid and recognised.