A Johannesburg-based company has applied for the liquidation of popular sneaker brand Drip Footwear for failing to pay it more than R20-million.
WideOpen Platform filed the papers in the high court in Johannesburg, seeking an order to wind up Drip, saying the company is insolvent and unable to service its debts.
The company also intends to file a lawsuit against Drip owner Lekau Sehoana for failing to pay the debt after signing a surety agreement for the entity.
In the papers, which we have seen, WideOpen Platform managing director Tomer Cohen says Drip should be liquidated in terms of the Companies Act, citing its inability to pay for advertising services rendered to the sneaker brand.
“The respondent is currently indebted to the applicant in the sum of R20 442 285.06 with interest thereon at the prevailing prime interest rate calculated from 1 June 2023 to the date of payment, both days inclusive,” read the court papers.
“The respondent’s indebtedness to the applicant arises out of certain advertising agreements concluded between the parties.”
Cohen claimed Sehoana signed an acknowledgement of debt (AD) after neglecting to send money.
Drip and Lekau admitted that they owed WideOpen the enormous sum in relation to the AD.
Both Drip and Sehoana undertook to pay a total of over R3.6-million in three instalments of over R1.2-million from June 30 last year.
They also made a commitment to pay just under R6-million in three instalments of under R1.9-million from September 30, and promised to pay almost R12-million in three instalments of under R4-million from December 31.
They further committed to fork out more than R6.9-million in three instalments of R2.3-million from the end of this month.
“The full balance outstanding in respect of the principal debt shall be paid in full on or before 30 April 2024,” read the papers.
Additionally, Lekau and Drip promised to pay more than R1.7-million for the acknowledgement of debt paperwork.
WideOpen said Sehoana and Drip breached the AD when they defaulted on the payment of the debt.
“Due to the respondent’s previously mentioned violation, I directed Ms Kim Warren of KWA Attorneys, the applicant’s legal representative, to send a letter to the respondent on November 1 2023, in accordance with Section 345[a] of the Companies Act .
“The respondent did not pay the outstanding amounts within the allotted 21 days, nor did they secure or compound to the applicant’s satisfaction.
“On December 7, 2023, SVN Attorneys, the respondent’s legal representatives, wrote a letter to KWA Attorneys stating that the respondent was factually solvent and purported to contest its debt to the applicant,” according to the documents.
Cohen said they wrote to Drip and Sehoana that factual solvency is not, on its own, a reason to withhold a winding-up order.
According to him, factual solvency is merely one of several elements that a court would evaluate when deciding whether to issue a winding-up order.
“No further communication was received from the respondent or its attorneys.”
He wrote in the papers: “Under the circumstances, I submit that the respondent is deemed unable to pay its debts and accordingly falls to be wound up.
“In addition to the aforesaid, it is readily apparent that the respondent is at least commercially insolvent in that it is unable to pay the above-mentioned liquidated sums to the applicant.”
Cohen stated that he has also instructed his lawyers to institute a separate suit against Sehoana, who signed security papers for the deals.
“There is no evidence that the security is readily realisable.
“In fact, notwithstanding demand, Mr Sehoana has not, nor has he attempted to settle the respondent’s indebtedness or any portion thereof to the applicant.
“I have accordingly instructed the applicant’s attorneys to institute proceedings against Mr Sehoana.”