South African entrepreneur Nonhlanhla Mavie has suffered another legal setback after the High Court in Johannesburg dismissed her application for leave to appeal a ruling rejecting her attempt to place Keliana Group (Pty) Ltd under business rescue, citing insufficient evidence that the company could be saved.

In a ruling delivered on October 8, Acting Judge M. Snyman found no reasonable prospect that another court would reach a different conclusion on the proposed rescue of the company, which is in liquidation and previously operated the Emoyeni Conference Centre in Gauteng.

Court questions Sandhurst property valuation

The dispute centred on a Sandhurst property in Johannesburg, which Nonhlanhla Mavie, a South African businesswoman, director, and corporate surety of Keliana Group, who has been involved in high-profile commercial and banking litigation, argued could generate better returns for creditors if sold through a properly marketed auction or under the supervision of a business rescue practitioner.

Liquidators had obtained an initial valuation exceeding R116 million ($7.04 million), significantly above the municipal valuation of R33 million ($2 million) and offers of R46 million ($2.79 million) and R50 million ($3.03 million), including value-added tax.

However, Snyman found that the R116 million ($7.04 million) valuation was not supported by sworn evidence, making the prospect of securing a substantially higher sale price speculative.

The proposed rescue plan itself relied on a provisional sale value of R50 million ($3.03 million), subject to the property’s condition and inspection, alongside post-commencement financing from an unidentified investor.

The judge also found that the plan failed to adequately explain how the company’s Hurlingham and Middel Bosch properties and other outstanding debts would be addressed, undermining the argument that business rescue would deliver better outcomes for creditors.

Business rescue plan fails to convince court

Under South Africa’s Companies Act, an applicant seeking business rescue must demonstrate that a company is financially distressed and that there is a reasonable prospect of rescuing it.

Although Keliana Group’s financial distress was not disputed, the court found insufficient evidence that the proposed plan could achieve the objectives of business rescue or improve creditor recoveries.

The court also upheld the punitive costs approach adopted in the original proceedings, finding that the business rescue application and subsequent appeal amounted to an abuse of court process. It cited prolonged litigation, alleged delays in pursuing the applications, and the absence of a convincing explanation for why attorney-and-client costs should not apply.

Nonhlanhla Mavie’s application for leave to appeal was dismissed with costs on an attorney-and-client scale, leaving the earlier rejection of the business rescue application in place.

Keliana Group remains in liquidation

Nonhlanhla Mavie is the founder and sole director of Keliana Group, a South African business services company registered under number 1962/000738/06. The company changed its name to Keliana Group in November 2019.

The latest ruling does not establish the company’s total liabilities, the final sale value of its properties, or the amount creditors may ultimately recover. It does, however, leave the proposed business rescue without judicial approval, with the company remaining in liquidation.