Founder: Turnaround Talk
One of the major criticisms of the business rescue/liquidation process is that it can become lengthy, which is often imprudent for a company that is already unsure about its future.
Most of this criticism, fairly or unfairly, has been placed at the door of BRPs and liquidators, with some industry experts questioning the ability of these professionals to execute their work with high levels of skill.
However, other speedbumps occur where BRPs and liquidators are not at fault. Recent reports have surfaced about the worrisome state of certain aspects of the South African legal system and the rapid decline in the administration within the Masters Office and the Johannesburg High Court.
Massive issue
An article by GroundUp points out that lawyers are complaining that the offices of the Master of the High Court are increasingly dysfunctional. As a result, people are unable to tie up deceased estates, set up or liquidate trusts, or appoint overseers of trusts and estates, among other legal procedures. The Master’s Office also manages the Guardian’s Fund, which manages money for people legally incapable of managing their affairs, such as children or people with mental disabilities.
“The Master’s Office was functioning well enough until Covid,” a Cape Town attorney, who wished to be anonymous, told GroundUp. “They can’t seem to pick themselves up again.”
GroundUp was shown photos, apparently from inside the Johannesburg Master’s Office, that show papers scattered across carpets and desks. Attorneys say delays at the Master’s Office are unpredictable. Some documents are issued in the required few weeks; others take months. Pretoria attorney Ronel van Rooyen said: “The filing system seems to be random.”
She said the Master’s Office did not respond to emails or phone calls. Yet members of the public, including attorneys, are unlikely to get hold of any staff if they go to the office. “There’s no boss taking control,” she told GroundUp.
Image By: News24
The GroundUp article points out that another Cape Town attorney, who also wished to stay anonymous, explained that when liquidating a deceased estate, documents are submitted to the Master’s Office, and a letter of executorship should be issued within 21 days. Without this letter, the assets remain frozen. “It’s a very simple process. The Masters Office just needs to process the documents,” he said. However, it now takes six to ten follow-ups to see that it is done. He said it can take nearly a year just to get a letter of executorship. “You can just assume that the further you are in the process, the more it will be delayed,” he said.
The GroundUp article adds that there are 15 steps needed to wrap up an estate, according to Brenton Ellis, from the Fiduciary Institute of Southern Africa (FISA). According to Ellis, the entire process of wrapping up an estate ought to take six to eight months, “but this turnaround time is currently highly unlikely”.
And these issues are not limited to the Masters Office. A recent article by News24 points out that the filing system at the Johannesburg High Court is in such a shambles that it was deemed a fire hazard by safety officials. Pictures of files and boxes piling up in hallways and passages grace the article, which only adds to its macabre content. The party that allowed News24 to take these pictures was not received well by Gauteng Judge President Dunstan Mlambo.
“I’m monitoring the situation and whilst there’s a delay in getting things right, I take exception to the fact that the Deputy Judge President invited you and gave the interview he did. He was totally out of line and had not consulted me as head of the court about this,” Mlambo told News24. Mlambo also said that he noted News24 was allowed to take pictures of files stored in public areas. “Our file storage challenges are well known and I fail to understand why this was exposed to you as a journalist. Should you be inclined to publish your interview with the DJP, I request that you include this response from me.”
Public Works Minister Sihle Zikalala’s spokespeople Lennox Mabaso and Thami Mchunu said the minister had “expressed outrage at the slow pace of doing preventative maintenance in government facilities even though there has been a devolution of some maintenance functions to line departments”. “Minister Zikalala’s charge comes amid growing concerns that some government facilities are becoming a health hazard with piles of flammable material and some health and safety non-compliance posing risks to the lives of occupants,” they told News24.
Urgent intervention
An article by The Mercury pointed out that Justice and Correctional Services Minister Ronald Lamola has approved a rescue plan for the Master’s Office, which has been plagued with backlogs and inefficient processes across the country.
The Minister’s plan includes increasing the number of matters which must be finalised in four months from 65% to 80%. Currently, the annual plan has 65% as a target.
The rescue plan seeks to eliminate the backlog, decrease the number of customer complaints in the next four months, increase accessibility to services and increase communication with citizens and stakeholders.
Ministerial spokesperson Chrispin Phiri told a press briefing that to fulfil these obligations; the minister has approved a rescue plan that will implement an interim strategy to improve digitisation and technology upgrades, human resource capacity, process standardisation, transparency and anti-corruption measures as well as promote public and legal community engagement.
“The Master’s Office must live up to its public obligation to handle deceased estates, liquidations, trust registrations, curatorship and the guardian in funds, in line with our collective commitment to justice,” he said.
Image By: IOL
The Mercury pointed out that Phiri said the Master’s Office is “steadfast in its efforts to improve service delivery and turnaround times”, adding that an online deceased estates registration system was recently developed to address challenges clients are encountering when reporting a deceased estate case.
“The deceased estate registration system enables members of the public to submit their deceased estate applications online, giving the users the ability to register an estate from the comfort of their homes or offices without the need to physically visit any Master’s Office or service point,” he said.
According to Phiri, this system has been operational since October 10 at five offices, including Johannesburg, Durban, Cape Town, Pretoria and Thohoyandou.
The article added that he said the system would be implemented in all the other offices soon. Phiri said in an effort to broaden access to services, the Master’s Office has also made available information kiosks at service points for members of the public who may not have data to access the deceased estates online registration system.
“The new system will contribute to queue reduction at our service points and improve on the turnaround times for resolution on the deceased estates matters,” said Phiri. The plan comes as frustrations with the Master’s Office were beginning to boil over due to inefficiencies.
Complicating distress
This is concerning as it will only complicate the already untenable situation that many companies find themselves in when dealing with financial distress or liquidation.
Unfortunately, employees will always be the sacrificial lambs in the legal delays. We do not have to think very far back to remember the financial plight of Mango employees when Public Enterprises Minister Pravin Gordhan stubbornly refused to seek a definite resolution to that issue. Similar concerns were raised during the Comair liquidation, where labour unions highlighted that there was more to the rumours of mismanagement than meets the eye.
The delays in the court system are unacceptable for companies that are facing financial distress. They are under pressure to return to profitability to add value to shareholders. Further, when it comes to liquidation, employees within these companies need to be able to move on and get closure on what will be an overly stressful period for them.
This is yet another example of how Government is becoming an agent of distress. Don’t give these companies another handicap.
