The KwaZulu-Natal High Court has placed a Durban trust under provisional sequestration after it failed to repay a Standard Bank loan, IOL reported.
The court found that the Continental Trust could not pay its debts. It also rejected the trust’s attempt to dispute the bank’s figures.
“The conclusion is therefore irresistible that the Trust did not pay at any stage because it could not pay,” Judge Mossop said.
The trust owned a butchery, a delicatessen and a bakery in Durban. All three businesses have since closed.
Standard Bank gave the trust a R9 million commercial property loan in December 2016. The loan was secured against a Durban property.
Monthly payments were about R130 000. Interest was set at the prime lending rate plus 1.8 percentage points.
The trust fell behind on its payments and did not settle its municipal bills. By January 2021, its municipal account showed a debt of about R2.6 million.
The trust said this was for penalties linked to changes made to the property without approved building plans. The bank was told the matter was being handled at the highest level.
In April 2023, trustee Hasan Khan emailed the bank. “GOOD NEWS! Town planning has approved the plan,” he wrote.
When the bank’s lawyers checked the municipal account themselves, the debt had grown to about R5.2 million. About R4.9 million of that was overdue.
Arrears on the bank loan reached about R270 000 by February 2023. By November 2024, they stood at about R1.6 million.
Standard Bank then demanded the full balance of about R6 million, but the trust did not pay.
In June 2023, the trust’s lawyers promised full payment within four months. That payment was never made.
In March 2025, Khan asked for another six months. He pointed to many challenges, including building plan problems that slowed progress with tenants.
The judge found that this March 2025 email was an act of insolvency. Under the Insolvency Act, telling a creditor in writing that you cannot pay your debts counts as one.
The trust argued that its assets were worth more than its debts. Khan valued the property at R25 million and the bakery equipment at R500 000.
Khan did not explain how he reached these figures. He also confirmed that he had no valuation skills.
The bank’s valuer put the property at R12 million in a forced sale and R16 million on the open market. Mossop accepted these figures.
With the bakery equipment included, the trust’s assets came to at most R12.5 million. Claims against it were about R22 million.
The trust also said the bank’s demand and its certificate of balance did not match. It called the interest rate “exorbitant”.
Mossop found that Khan compared only the capital amount with the total demand. This left out interest and interest on overdue interest. The judge said the gap was explained by one word: time.
The judge found the disputes were made up to block the application. He said there was a reasonable chance that creditors would benefit from sequestration.
Interested parties have until 27 January 2027 to show why the order should not be made final.
Source: this article is based on reporting by IOL. Image: IOL. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.