Grahamstown developer put in business rescue

The massive proposed development stalled without a brick being laid after the company, Belmont Development, ran into financial difficulties.

Disillusioned international and local investors, who together held a 50% share in Belmont Development, resorted to the high court to place it into business rescue.

The development, proposed by Belmont Development director Dave Davies, was to be built on the old Grahamstown golf course and consisted of 627 houses, three apartment blocks and a large shopping complex with 750 parking bays.

Investor in the scheme and Belmont Development shareholder James Williamson – along with several Norwegian investors who pumped some R70-million into the scheme – alleged in court papers that Davies had conducted the affairs of the company in a way that unfairly disregarded the interests of other shareholders.

Williamson said Davies, who owns the remaining 50% share in the company, had allowed it to incur R6-million in debt, risking liquidation.

He said only business rescue proceedings could save the company.

Such proceedings allow for the temporary appointment of a “rescue practitioner” to assist in the rehabilitation of a flailing business.

It also provides a temporary moratorium on creditors who may wish to sue or liquidate the company.

Davies denied all allegations against him and accused investors of using business rescue proceedings in an attempt to take control of the valuable company project.

But Judge Selby Mbenenge said Davies’s fear that investors wished to oust him was without merit.

Mbenenge said liquidation would be catastrophic for the investors and he was satisfied that a reorganisation of the company under a business rescue practitioner would restore it as a profitable entity.