Johannesburg - The Golden Lions Rugby Union (GLRU) is "hopelessly
insolvent, both factually and commercially", its former potential equity
partners said in court papers filed in the South Gauteng High Court.
The Guma Tac group has taken steps to liquidate the GLRU to regain multi-million rand loans.
Guma
Tac, which is jointly owned by
Robert Gumede and Ivor Ichikowitz, cut
ties with the GLRU in June 2011, shortly before it was to have purchased
a 49.9% stake in the union.
"The object of the application is to
bring about the winding-up of the respondent on the ground that it is
unable to pay its debts," Guma Tac said in the affidavit.
The
former potential equity partners claimed in the court papers that the
GLRU owed Guma Tac in excess of R8m and Ichikowitz more than R2m.
"As
will appear from the annual financial statements of the respondent (the
Lions) over three years, the respondent's financial position has
deteriorated to a position where its liabilities exceed its assets by
tens of millions of rands," the court papers read.
It also
revealed that the Lions' auditors Price Waterhouse Coopers already in
December 31 2008 reported that the union's "liabilities significantly
exceed its assets and that the ablate of the company to continue as a
going concern is uncertain".
In a table it demonstrated that the
Lions' total liabilities exceeded its total assets by R48.6m in 2007,
which ballooned to R73.9m by December 31 2010.
In the affidavit
the applicants claim that if they had not advanced any payments to the
Lions, the union would have been unable to pay the players' salaries.
"It
would have been in breach of its contractual obligations and in all
likelihood lost most of its players, including its top senior players,
and placed the respondent in a position with no choice to join other
financially stable teams.
"The applicants' funding allowed the
Lions to pay for the salaries of the players, coaches and staff, to buy
both the international and local players, and employ other value-adding
staff to improve the team's performance, culminating in them winning the
Currie Cup in 2011."
Guma Tac said they paid staff salaries in
January 2011 before the start of the Super Rugby season of which R821
185 went towards staff payroll, more than R4m to the players' payroll,
and R171 000 to Lions conditioning coach Wayne Taylor.
The group also paid an extra R400 000 to the Lions to cover the monthly grants for the GLRU's 24 amateur rugby clubs.
Despite Guma Tac's claims, the Lions have denied media reports that they could be liquidated.
"Until
we are given a full disclosure on the claim, we cannot pay back any of
the alleged 'loaned amounts' to the GLRU," GLRU president Kevin de Klerk
said earlier in the week.
Guma Tac claimed the Lions disputed the loan because their agreement was never put in writing.
It further claimed that the union approached Absa bank for an extension on its overdraft in October 2011.
The
bank, however, was only willing to grant an extension if the Lions
could provide a letter from Guma Tac confirming future funding.