VBS in liquidation press release

12 December 2024

VBS Mutual Bank (“VBS”) liquidator pays substantial second dividend to concurrent creditors

The VBS liquidator, Mr. Anoosh Rooplal is pleased to announce the commencement of the distribution of the second liquidation dividend of 20 cents in the Rand to proven concurrent creditors. This follows the confirmation of the second Liquidation and Distribution account by the Master of the High Court on 8 November 2024, as required by the Insolvency Act.

The second dividend of 20 cents in the Rand or 20% of concurrent creditors claims against VBS amounts to approximately R458 million of which approximately R291 million will be paid to relevant municipalities. Concurrent creditors who lodged valid claims included 13 municipalities, various business depositors, retail depositors and supplier creditors.  Retail depositors included those retail depositors who had claims of over R100 000, after they were paid out up to the first R100 000 through the SARB guarantee via Nedbank. 98% of depositors who had R100 000 or less were paid their monies in full through the guarantee.

Rooplal noted, “This is a substantial dividend and the team is currently verifying all concurrent creditors bank accounts.  Payments to all verified concurrent creditors commenced during November 2024 and we anticipate to complete this process by end of January 2025.”

In 2022, the first liquidation dividend of 7 cents in the Rand was paid to all proven concurrent creditors. This amounted to approximately R159 million, of which approximately R110 million was paid to relevant municipalities.

All preferent and secured creditors were fully paid in the first liquidation dividend distribution.

VBS Mutual Bank was placed into liquidation by the High Court on 13 November 2018. The liquidation order was due to findings made by Rooplal and 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: “We are very pleased with the success that our collection efforts have delivered for creditors, notwithstanding the fact that massive fraud and theft of some R2.3 billion was perpetrated against this bank. This second dividend distribution brings the current payment to concurrent creditors to R617 million.”

Concurrent creditors have effectively recovered 25.6% of their monies.  

“This is a fantastic outcome given the many challenges that the bank faced. When compared to other liquidations, it is not uncommon to have final recoveries of less than 5%. We have left no stone unturned in our recovery efforts and are elated to have distributed approximately R400m to the municipalities which is effectively a distribution to the South African taxpayers”, continued Rooplal.

The distribution of the second dividend does not affect the loan account holders, i.e. those clients still owe the Bank monies, whose contracts remain valid and enforceable.  The liquidation team continues to collect monies due to it, from loan account holders and depend on various legal applications that were initiated in order to recover all monies that are owed to the estate.

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 an additional dividend payment to creditors in the future.”

ENDS

Contact Louise Brugman on behalf of the liquidator of VBS Mutual Bank at 083 504 1186.

Further details available on www.vbsmutualbank.co.za

Notes to editors

Preferential creditors (Ex Employees)

Preferential creditors include ex-employees of VBS Mutual Bank. Those employees received payment of both their preferent claims and a portion of their concurrent claims in 2022. All 26 employees 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.

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.