Thomas van Zyl - The Dangerous Liquidation Industry: Assassinations, threats, bribes - and why voluntary is best

In this interview sponsored by Progressive Administration, MD Thomas Van Zyl, lists the benefits of voluntary liquidation - as opposed to deregistration of a company. He explains the process and its timeline, and shares interesting case studies. Van Zyl also reflects on the dangers of being in the liquidation business - especially in the wake of the assassinations of Cloete Murray and his son, as well as that of Bouwer van Niekerk. “We have liquidators that are threatened on a daily basis. I was on the phone this morning with a friend of mine who's a liquidator and he received a death threat in an unrelated, totally different matter. And now you take these things quite seriously and it's nerve-racking. It certainly is.” Van Niekerk further reveals details about the biggest case currently being handled by Progressive Administration, the Ponzi scheme matter involving HGG Financial Group. Van Zyl, whose mother worked in the Master’s Office and whose father was also a liquidator, has useful advice for those who face liquidation - voluntary or otherwise.

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Edited transcript of the interview

Chris Steyn (00:01.123)

Welcome. This interview is sponsored by Progressive Administration and with me is MD Thomas Van Zyl, who is here to talk about voluntary liquidation. Welcome, Thomas.

Thomas Van Zyl (00:12.302)

Thanks very much.

Chris Steyn (00:14.437)

Firstly, is voluntary liquidation better than deregistration?

Thomas Van Zyl (00:21.288)

I think whether it's better or not is a difficult question, but I think it's becoming more advantageous to members of the public or directors that hold directorships in various entities. And to go through the process of deregistration is not necessarily complicated, but it's cumbersome. And it also requires...assistance with auditors, you certainly need them to sign off and then you need to go through the the SARS requirements and that's where the advantages of a voluntary liquidation actually play play quite a big role.

Chris Steyn (01:10.223)

What are those advantages? Would you mind listing them for us?

Thomas Van Zyl (01:14.178)

Yeah, no problem. So I think the biggest advantage of a voluntary liquidation is that it brings finality to the company. And because it brings finality, it kind of closes the file on any future claims made by creditors. And I think the biggest one is the personal liability that directors face or could face.

A lot of the times directors are not the accountants, they're not the auditors. And when you go through a process of deregistration, you're relying on those accountants or auditors, or in fact your bookkeepers. And sometimes that information is not correct. And if you deregister a company, it doesn't close the company down. It kind of leaves it in limbo. 

And creditors...and SARS, and SARS is often the biggest creditor, they can come along in future and they can reinstate the business and they can then institute claims as well as personal claims, claims that you wouldn't even have been aware of. 

And that's where voluntary liquidation I think plays the biggest role or offers the biggest advantage. It forces everyone to come around the table. It forces a closing of the file at least up until the date of the voluntary liquidation. And it's fences things and it forces everything to be dealt with then and there. And then after that, it's closed.

Chris Steyn (02:59.365)

So what does the process involve if somebody opts for it?

Thomas Van Zyl (03:04.162)

Well, it's quite simple. It's certain resolutions that are required. Those resolutions need to be completed. There's what we call a CM100. It's more of a statement of affairs that detail the assets, the company, sorry, assets and liabilities. 

And those documents need to be submitted to the CIPC, and once they're filed the company gets given a certificate called the CM26 LIQ certificate which places the company under voluntary liquidation and that process can take, here at Progressive Administration we can do it in three days, a deregistration can take months.

Chris Steyn (03:59.227)

That was what I was going to ask you. How quickly can it happen?

Thomas Van Zyl (04:06.016)

Yeah, so I mean to go through a deregistration, you also have to file resolutions. You have to get your auditors to tie up proverbial loose ends. You've got to get a SARS Clearance Certificate. So those are all things that are somewhat out of your control, I suppose. And that's what makes the process take longer. 

Again, voluntary liquidation, we can have it actioned in three days.

Chris Steyn (04:37.179)

Please give us some case studies, examples of where this has happened and where it worked in favour of the client.

Thomas Van Zyl (04:47.022)

So we obviously work with a number of auditors - and no disrespect to SARS, but they are becoming somewhat trickier to deal with. Rightly so, I would imagine. 

And what we're finding is we have audit firms that are coming to us that have a large number of clients that are wanting to deregister their companies.

Now, I think it's worthwhile just mentioning that if the company in question has remained dormant throughout its life, that should be a deregistration because it's just, there's nothing there that could be an obstacle, I suppose. 

I mean, in cases where the company did trade and is now dormant, that is where I think it is easier for directors to proceed with a voluntary liquidation than a deregistration. 

But to answer your question, to give you some case studies, I mean, we've got a number of different voluntary liquidations where the process was started for a deregistration. And about two months later, when letters of demand were coming from creditors - they either didn't know about or they'd forgotten about - it just threw the whole process upside down and we see that happening quite a lot where people in those positions come to us and they say what what do do now?

Chris Steyn (06:28.763)

Can you give us specific cases without mentioning names or company names.

Thomas Van Zyl (06:35.81)

Well, I mean, there are a few specific cases. We have an auditor that has got a number of clients that are in the process of deregistration, but they're not able to get the Tax Clearance certificates because SARS has flagged some historic liability or they've flagged something irregular or they've just flagged that there's incomplete returns. 

There's so many things that we find is causing particularly SARS to not issue the certificate, the Tax Compliance certificate. I don't know if that answers your question without naming company.

Chris Steyn (07:26.363)

Now, I just read about a case in the agricultural sector where there has been many liquidations. How would that benefit a farmer?

Thomas Van Zyl (07:40.142)

Yes.

Well, we have a farmer at the moment who has put his company under liquidation, under voluntary liquidation. And in that particular case, he was exporting grapes to Israel. given the war that broke out between Gaza and Israel, he was unable to export his grapes, his table grapes to Israel. 

And it just took, the liquidation process came about because of one harvest where he was unable to secure purchase buyers for his harvest, his produce. And that's put him into liquidation. But at that point, he was looking to sell the land, deregister the company, and go through that process. But just to get through the hoops of actioning that, it was far easier for them to put it under voluntary liquidation, force all the creditors to come to the table, engage with the liquidator where the liquidation process is run under the supervision of the master's office and to bring finality sooner than it would have been if he undertook that himself or with his accountant or something like that.

Chris Steyn (09:14.501)

With so many Ponzi schemes doing the rounds, have you had any experience with that?

Thomas Van Zyl (09:17.933)

Yes, we do. We've got a liquidation at the moment of a Ponzi scheme. It's the HGG Financial Group case or the HGG case. And it's a fascinating, fascinating case. It is your classic Ponzi scheme where your new investors investing the money and that capital is being used essentially to pay distributions to old investors. 

But, you know, we see in our market there's Ponzi schemes, your classic Ponzi schemes and then there's your more complicated Ponzi schemes with cryptocurrencies and that type of thing as well.

Chris Steyn (10:14.235)

How would that work to the benefit of people who have lost money to the Ponzi scheme?

Thomas Van Zyl (10:19.99)

Well, I think the benefit of a liquidation, regardless of a voluntary liquidation, but a liquidation itself can allow for a inquiry to be held into the financial affairs. And that gives rise to what we often, we hear this term bandied about, it provides for subpoena power. So the liquidators can then subpoena interested parties or creditors or they could subpoena debtors or you name it to obtain and extract information that is going to reveal where these people's monies have gone essentially. 

And throughout our industry and liquidators we are having inquiries all the time and it is a very effective way. It's an expensive process and it's a lengthy process, but it is effective. You interrogate your witnesses and you get your information and then you go from one stone to the other, from one dot to the other, slowly connecting all of those dots.

Chris Steyn (11:36.293)

Now, being a liquidator has become a very dangerous profession in South Africa, especially in the wake of some assassinations. What atmosphere are you working in?

Thomas Van Zyl (11:48.95)

Yes, it's a good question. I get asked that a lot.

It is a very, I think it can be very murky, especially in big liquidations and liquidations that have reach, that go into your State enterprises or at least your government officials. 

We are currently involved in a liquidation. It's at a provisional liquidation at this stage. There are stories here for days…this bribery like you won't believe and before the assassination of Cloete Murray and his son…I didn't think I would actually worry about anything like that but I mean we've now seen Bouwer Van Niekerk being assassinated about a month ago..

We have liquidators that are threatened on a daily basis. I was on the phone this morning with a friend of mine who's a liquidator and he received a death threat in a unrelated, totally different matter. And now you take these things quite seriously and it's nerve-racking. It certainly is.

Chris Steyn (13:12.315)

And how do you deal with people who feel they have been unfairly liquidated? When you know you've done everything the right way.

Thomas Van Zyl (13:25.322)

Well, you know, the one thing that gives us comfort is that whether it was me or another liquidator, the process remains the same. The steps of the winding up of the company, they remain the same. If there's to be an interrogation, there's going to be an interrogation whether it's me or anybody else. I think if you can explain this to the person, it certainly helps go a long way that where they can absorb the fact that there is a bigger process involved and it's a process beyond whoever just that liquidator is. At least we try and explain that, but sometimes people don't care.

Chris Steyn (14:13.391)

Whether it's a voluntary liquidation or a forced liquidation, it's a painful process for the people involved. What can you say to them?

Thomas Van Zyl (14:25.548)

Well, I think if you work with the liquidator, as opposed to trying to hide things from the liquidator, you will actually get to the end result. And I think we all take our eye off the ball as to what that end result is, and that is to try and obtain the biggest dividend for creditors as possible. 

And most of the time we have creditors fighting with other creditors. We have one creditor trying to exert its rights over another. And at the end of the day, all it does is waste money and it incurs delays and costs that could be completely avoided. So that's what I want to answer your question. My message would be let the process unfold and just work with the liquidator.

Chris Steyn (15:24.635)

What's the biggest case you guys have handled?

Thomas Van Zyl (15:29.814)

Well, at the moment it would be the Ponzi scheme, is HGG.… You could just Google it and you'll see all the shenanigans that have unfolded there. 

Here we have a case as well where the former director committed suicide in Hermanus. And just after that we had Markus Jooste committing suicide in Hermanus. So Hermanus is apparently apparently the place to be if you're in a Ponzi scheme or something like that. 

Yeah, I would say HGG is probably the biggest case we have at the moment.

Chris Steyn (16:12.667)

And what made you become a liquidator?

Thomas Van Zyl (16:16.962)

Well, I grew up in a liquidation environment. My grandmother worked at the Master's Office and I can remember running through those halls when I was five or six. Then my father became a liquidator and he sadly passed away on the 25th of July and I'm now a liquidator as well.

Chris Steyn (16:43.215)

So it's a family business. Generations of.

Thomas Van Zyl (16:43.266)

So in a manner of speaking, is a family business.

Chris Steyn (16:50.587)

Okay, thank you. That was Progressive Administration MD Thomas Van Zyl speaking to BizNews. I'm Chris Steyn. Thank you, Thomas.

Thomas Van Zyl (17:01.154)

Thank you very much.