Developers of controversial Durban 'monstrosity' placed in liquidation
The developers of a controversial yet-to-be completed apartment building in Currie Road in Berea, Durban, were placed in liquidation on Tuesday.
This means that the building - deemed a “monstrosity" by neighbours - will be placed under the supervision of a liquidator, who will attempt to sell it at public auction in order to recover an estimated R93m owed to creditors by Serengeti Rise Industries.
However, one appraiser, John Wyles, has cautioned that the building's “controversy and stigma” may affect the value, which he estimates to be between R50m and R65m.
In a report, Wyles said there is an ongoing investigation into how city officials signed off on the rezoning of the land, which permitted the “boundary to boundary” nine-story development.
Because the building is still a shell and has been exposed to the elements, Wyles said there may be significant costs for infrastructural damage, apart from the costs of completing the building.
On top of this, lobby group Save our Berea (SOB) - which along with neighbour advocate Pops Aboobaker has been at the forefront of the outrage at the building - is considering bringing a court application aimed at having the building demolished.
Aboobaker told TimesLIVE: “No developer in his right mind would have anything to do with this. Creditors should rather seek relief from the directors personally, based on their reckless or unlawful dealings. I invite them to join the campaign to destroy this development once and for all.
“This is not about money; it’s an issue of principle and the preservation of our city.”
SOB and Aboobaker went to court to challenge the authority of the eThekwini Municipality to rezone the site.
In her ruling in the Durban high court in June 2015, judge Esther Steyn found in their favour. She ruled that the municipality had not properly consulted neighbours, as is required by law, and the building should be lowered to four stories to fit in with the original zoning.
Serengeti appealed this and the Supreme Court of Appeal ruled in 2017 that the building was lawful. However, little happened on site and it emerged that in September 2015, scaffolding company Nela Kahle had already obtained judgment against Serengeti for almost R21m for non-payment of its bill.
In March last year, Serengeti placed itself under business rescue. The company admitted to having debts but said it could trade its way out of trouble through the sale of apartments.
Business rescue practitioner Cloete Murray reported back, saying there was no hope of this. Instead he proposed a plan to repay creditors through a “winding-up process” under his control.
But Nela Kahle - which is now owed R50m, taking into account interest, legal fees of close to R1.5m and the R5m in scaffolding that is still on site - cried foul.
In a letter to Murray, attorney Brett Nicholson said his plan would only benefit shareholders, not creditors.
Nela Kahle then brought a court application alleging that Serengeti had been dishonest when it applied for business rescue, claiming that the company was already insolvent, had no working capital and only R3,000 in the bank. It also seemed to have already spent money it claimed to have received from purported sales.
The application was not opposed by Serengeti or Murray.
On Tuesday, Pietermaritzburg high court judge Piet Bezuidenhout formally ended the business rescue process and placed Serengeti into final liquidation.
“This will now allow for a proper interrogation of all the creditors’ alleged claims,” said Nicholson.