Investment: Pensioner goes to court

2009-03-15 00:00

Retired Howick resident Dorothy Griffin, who invested R60 000 with Hillcrest-based Edwafin Investment Holdings (Proprietary) Limited in 2005, has applied to the Pietermaritzburg High Court for the company’s provisional liquidation because it has failed to pay interest on her investment since November/December last year.

She expresses concern that the company appears to be “soliciting investments without notifying potential investors of its financial predicament”.

Edwafin claimed in court papers that it is not insolvent, although it is experiencing a temporary “cash flow crisis” due to the economic downturn and other reasons.

Its draft balance sheet dated January 30 reveals that it has fixed assets of R1 506 277, investments of R108 610 989 and its loan accounts in subsidiaries of R132 585 004.

Edwafin executive chairman Patrick Stapleton said Griffin’s contentions are based on a misconception of the nature of his business. He said they are entitled by law to take investments in high-risk entities.

He said that by doing what its prospectus permits it to do, Edwafin cannot possibly be acting unlawfully.

He maintained that Griffin has a “very limited interest” in the matter since her investment constitutes only 0,008% of the total of debenture holders.

Meetings of debenture holders are scheduled to be held in Durban on April 28 and Cape Town on April 30, he said. By that time, Edwafin would be in a position to report back on progress in a major project, the Damara vehicle, whose delays are a reason for Edwafin’s current cash flow difficulties, he added.

Financial director Donald Hutchinson said Griffin’s investment with Edwafin is on a “long-term” basis of five years, redeemable on July 7, 2010. While Edwafin is able to repay Griffin’s investment forthwith, this would be contrary to their agreement, would have the effect of preferring one investor over others and may cause a run on its bank account.

The case has been postponed for argument to April 17.

Griffin says in her affidavit that both she and her son, Bruce McGlew, invested with Edwafin. She alleges that a cheque she received on December 15 for November/December interest payments was returned marked “payment stopped”.

She maintains that in the circumstances, she is entitled to demand the return of her investment, and alleges that Edwafin concealed from her and other investors that it has been in financial difficulty for some time.

In October last year, a letter issued by the company said the difficulties in making monthly interest payments were due to “teething problems” with its database.

She submits that it is apparent that Edwafin cannot pay its debts in the ordinary course of business, and that this is an act of insolvency.

ingrido@witness.co.za

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