R1bn claim for damages against LeisureNet directors starts today
What is considered to be one of SAs biggest civil claims for damages will be heard today when the directors of the LeisureNet group are sued for more than R1bn for the groups collapse, says a report in Business Times.
Five years after the group went into liquidation, the 12 directors are being called to account in the Cape High Court for what the liquidators say was one of the largest corporate collapses in SA financial history. LeisureNet, owner of the Health & Racquet Club chain of fitness gyms, had 900 000 members and 7 000 employees at the end of 2000, with its last accounts showing an annual turnover of more than R1bn, most of it generated by H&RC. Following the failure of an ambitious overseas expansion programme, the company was placed into liquidation, with its liabilities exceeding its assets by R1.252bn. Rael Gootkin, an attorney with legal firm Mallinicks representing two of the directors cited by LeisureNets liquidators, said the 12 were being sued in terms of Section 424 of the Companies Act for allegedly conducting the business of LeisureNet in a reckless manner or with the intent to defraud its creditors. All 12 have denied any wrongdoing, Gootkin said. The final report of the statutory Section 417 inquiry into LeisureNets collapse, by senior Cape advocate Peter Hodes, has yet to be issued. Full Business Times report See another report in Business Report