VBS in liquidation press release

10 February 2022

VBS Mutual Bank (“VBS”) liquidator pays first dividend to creditors

The VBS liquidator, Mr. Anoosh Rooplal has commenced with the distribution of the first liquidation dividend to proven preferential and concurrent creditors. This follows the confirmation of the Liquidation and Distribution account by the Master of the High Court on 28 January 2022, as required by the Insolvency Act.

Preferential creditors include ex-employees of VBS Mutual Bank. Those employees have received payment of both their preferent claims and a portion of their concurrent claims. All 26 employees have received a final settlement up to R28 000 for their preferent claims as stipulated by the Insolvency Act. Employees’ claims that are cover R28 000 in value rank equally with other concurrent creditors.

A first liquidation dividend of 7 cents in the Rand is being paid to all proven concurrent creditors. This amounts to approximately R159m, of which approximately R110m will be paid to relevant municipalities. Concurrent creditors who lodged valid claims, include 13 municipalities, various business depositors, retail depositors and supplier creditors. Retail creditors include those retail depositors who have claims of over R100 000, after they were paid out up to the first R100 000 through the SARB guarantee via Nedbank.

The Mutual Bank was placed into liquidation by the High Court on 13 November 2018. The liquidation order was due to findings made by Rooplal in a Forensic Report that VBS Mutual Bank was “factually and commercially insolvent and unable to repay its debts against the background of massive frauds and the theft of depositor funds.”

Rooplal noted: “Notwithstanding the fact that massive fraud and theft of some R2.3 billion was perpetrated against this bank, we believe we have made good inroads to recover monies owed to the creditors of the Bank. A first dividend distribution of 7 cents in the Rand is therefore a great outcome given the many challenges that the bank faced.”

The distribution of the first dividend does not affect the loan account holders (i.e. those clients still owing the Bank monies) whose contracts remain valid and enforceable. The liquidation team continues to collect monies due to it, from loan account holders. Loan account holders are urged to continue to pay their monthly instalments. This is required in order to avoid recovery action being taken against default payers.

Rooplal concluded: “My team and I continue to trace and recover the assets of the Bank in anticipation of making additional dividend payments to creditors in the future.”

ENDS

Contact Louise Brugman on behalf of the liquidator of VBS Mutual Bank at 083 5041186.

Further details available on www.vbsmutualbank.co.za

Notes to editors

About the R100 000 guarantee of retail deposits who rank as sub ordinated creditors alongside the municipalities

On 9 July 2018, the SARB announced that it would facilitate the repayment of all retail deposits up to R100 000 per retail depositor, starting from 13 July 2018 for the following three years. Retail depositors include individuals, burial societies, stokvels and saving clubs’ deposits in VBS. The guarantee does not cover municipal or corporate deposits. Qualifying funds were consequently transferred to Nedbank which facilitated access to the account holders. Retail depositors were given up to 8 July 2021 to redeem their funds. Some 98% of retail depositors with investments of up to R100 000 received their monies in full. The intention for this initiative by the SARB in consult with Nedbank, was always for the vulnerable depositors to not suffer financial loss as a result of the fraud that was perpetrated at VBS and hence the decision by National Treasury to guarantee these funds.

14 affected municipalities

The municipalities who had invested public funds into VBS were Makhado, Vhembe, Collins Chabane, Greater Giyani, Ephraim Mogale, Tubatse Fetakgomo and Lepelle-Nkumpi in Limpopo.

Also included were Madibeng, Mahikeng, Moretele, and Dr Ruth Segomotsi Mompati in the North West as well as Merafong City and West Rand in Gauteng.

The municipality of Elias Motsoaledi in Limpopo did not submit a claim against the Bank.

A municipality’s management and council are required to account for all income and assets belonging to a Municipality. It is therefore their responsibility to explain how their funds are to be utilised and spent.