IRCA liquidation after business rescue fails

IRCA Global director, Carel Labuschagne. The MD is Willem van Aswegen. Their administrator announced liquidation in April 2016.
IRCA Global director, Carel Labuschagne. The MD is Willem van Aswegen. Their administrator announced liquidation in April 2016.

The IRCA liquidation was announced to staff on 1 April 2016, following a business rescue attempt, and a creditors’ vote. UPDATE; Irca sold to Wohbag, see http://sheqafrica.com/liquidated-irca/

http://sheqafrica.com/liquidated-irca/

IRCA Global was one of the five largest safety, health, environment and quality (Sheq) consulting, training and auditing providers in South Africa.

Independent business rescue practitioner, Dr Gert Holtzhauzen, told Sheqafrica.com that “IRCA staff was at all times kept fully abreast of the rescue process, and were updated on progress made and problems experienced.

“The notice of the Creditors meeting on 1 April 2016 was circulated to all staff members well before the time, and some staff members attended the meeting.

“Due to the creditors vote to not adopt the rescue plan, it was decided to liquidate the company, within the framework of the Companies Act. An announcement was made to staff directly after the meeting.

[Here is a newer report, on the sale of IRCA:

Liquidated Irca sold to Wohbag

In late February, Dr Holtzhauzen had published details of a proposed business rescue process, in terms of section 150 of the Companies Act. He was appointed in terms of Section 129, since Irca was financially distressed.

He noted that no audit has been carried out, nor has there been adequate opportunity to verify any of the information given to his team by IRCA, except where expressly stated in his report (see the full rescue proposal on the IRCA Global website).

The ledger indicates that IRCA creditors are owed a total of R54.3-m. The Submitted total is R186-m (see a list of the main creditors and amounts below).

During business rescue proceedings, the Practitioner had full management control, in substitution for its board and management.

Irca had only two active directors in recent months; Carel Labuschagne, and Willem van Aswegen as managing director.

Two additional directors were designated in March 2016; Zwelibanzi Bobby Henry Nkosi, and Andile Zamokuhle Nkosi.

“In the event of liquidation of the company, the return to creditors, based on the calculated liquidation and distribution, is zero,” reported the business rescuer in the proposal.

It was “therefore proposed that a compromise of R0.15 in the R1.00 is offered to concurrent creditors [see a partial list of creditors below] in this business rescue plan, which will include the Receiver of Revenue.

“A repayment plan to repay the creditors over an 18 month period, interest free, with no fixed monthly installment,” was proposed.

Rescue plan called for R8.5-m

The business rescue plan had calculated that a capital injection of at least R8.5-m was required to repay post-commencement creditors, and to get working capital, to trade IRCA out of debt (see the larger creditor totals listed below).

As part of the business rescue plan, IRCA had to constitute an effective Board of Directors, and implement proper corporate governance procedures in terms of the King code of Governance.

Cost cutting procedures and efficiency measures were implemented, but belatedly, according to what management told the rescuer.

Irca was registered in 1986 to operate as a Sheq services company. The business consisted of training, behavioural intervention technology, ISO implementation, auditing, risk assessments, software implementation, and quality management systems.

Irca Global had operated 17 branches, in seven countries. Most subsidiary companies recently ran at a loss, mainly due to cutbacks in mining and metallurgy.

IRCA Coastal was a self-funding and a sustainable business entity.

Some loans from the holding companies, BVI and South Africa, have been capitilised into share premium.

The rescuer had aimed to realise viable assets. He reported that he, or the liquidators, would more fully investigate the financial affairs of the company in due course.

Four months ago, IRCA issued notices to its employees of closure of non-viable subsidiaries and divisions, and proposed retrenchment of 10 of its 120 positions.

IRCA creditors

Some of the IRCA creditors, and their due (listed with Ledger amount; followed by Submitted amount) are;

ABSA Bank Overdraft 6,000,000 6,000,000
AMADAZI INVESTMENTS CC 29,720 49,534
AMBLEDOWN 17,520
AMOROKO TRAINING 43,070 233,485
ARINT CONSULTING 154,778 419,054
ASSOCIATION OF MINE… 112,080
BLUE VISION ITM 49,500
C Labuschagne (Loan to Irca) 361,423 361,423
CAREERS 242,565
CAROL BOUWER 2,540
Charmont Media CC 119,700 104,850
CHARTER QUEST 1,200,000 2,291,845
CST Secretarial Services [submitted] 7,998
Custom SA …
DATA WORLD …
DaVinci Institute students 399 71,256
DINICKS KITCHENS 15,891
Dirk D Haasbroek 13,714
DMR 1,042,188
DQS 81,873
DUNES TUTORING …
EVERLYTIC 8,892
FIRST FREIGHT 19,973
Gemcare Products 41,786 41,786
Godfrey Mothobi (Loan to Irca) 496,634 496,634
HESTER HAYWARD 13,065
HJ Wood Properties 1,908,741 1,908,741
IRCA CAPE TOWN 10,226
IRCA DURBAN 2,889
IRCA INDIA -147,422
IRCA VEREENIGING 501,829
IXIA TRADING RUSTENBURG 40,000 155,291
JAXTA CONSULTING 55,000
Justin Nash 3,683
LABOUR WISE 5,198 5,198
Liam Tax AdministratorsCC 8,173 5,723
Malcolm S Paul GBP 150,000; 3,000,000 3,573,900
MASTER BUILDERS ASSOCIATION 4,186
MED-E-DRIVE 125,822 192,000
MGK SOLUTIONS 37,383
MOULDER SKILLS DEVELOPEMENT 7,385
NEOTEL 174,426
NETWORK ALLIANCE 544,000
NEW MEDIA PUBLISHING 15,400
OFFICE GEAR 184,380 177,341
OPTIMUM UPGRADE BUSINESS SYSTEMS 16,998
Paramedical Consulting Services CC /LifeMed 816 7,044
QUADREM 3,514
Quinwood Investments (Loan to Irca) 3,347,355 3,347,355
RISK FREE WORKPLACE 9,480
ROPE ACCESS INSPECTION 209,317
Rossouws Attorneys 626,349 650,000
SACPCMP 24,265
SAFETY FIRST ASSOCIATION 9,291
SAGE VIP 168,078
Sasfin 1,418,488
SERVO VITA CC 17,270
SG CONVENIENCE GAUTENG 5,003
SIRIUS RISK MANAGMENT 275,311 255,311
SOUTH AFRICAN COLLIERY MANAGERS ASSN 4,560
South African Revenue Services 26,389,399 26,083,873
TARGAID TRUSTED SYSTEMS CC 110,000
THE BUSINESS ZONE /ALIVE TO GREEN 25,080
The Da Vinci Institute for Technology Management 2,599
Venditor Konica Minolta 130,899 235,397
WALTONS Rustenburg 5,666 5,666
Willem van Aswegen (Loan to Irca) 1,288,608 1,288,608
ZEELIE DE KOCK 268,568 471,833
ZEELIE DE KOCK HOLDINGS BVI 855
TOTAL 54,332,297 186,187,228

A claim totalling R 122 609 191 from Origo was rejected, as the debt was subjected to a debt equity swap in the 2011 and 2013 financial years.

Echoes of the Nosa rescue and liquidation saga

Absa had called in its overdraft to Irca, the same step that had triggered the liquidation of Nosa about ten years ago, for a similar amount.

In the Nosa liquidation saga, Nosa was sold for a nominal amount after a brief business rescue attempt by the buyers.

See the update report some months after the IRCA liquidation:

Liquidated Irca sold to Wohbag

Sources;
• Sturns Business Rescue Practitioners, 29 February 2016, in terms of section 150 of the Companies Act, 71 of 2008.
• Sheqafrica.com

Related Posts Plugin for WordPress, Blogger...
The following two tabs change content below.
Sheqafrica.com is Africa's largest independent SHEQ Magazine, hosting over 2 000 articles and news items since 2007. Sheqafrica.com is owned by the Cygma Group, a global provider of risk management and compliance solutions. Sheqafrica.com is registered as a digital publication with the ISSN.
Share

15 thoughts on “IRCA liquidation after business rescue fails

  1. This report is totally taken out of context and is not even supposed to have been posted. As far as for journalism goes I dare the reporter to review his source as the 1st of April is (Aprils Fools)

    1. I had asked IRCA’s Business Rescue Practitioner, Dr Holtzhauzen, whether the announcement was a bad April Fool’s joke. He answered that the date was a coincidence. The third Creditors Meeting was held on 1 April. The second Creditors Meeting was on 10 March.
      The rules of April Fool are that the joke has to be confessed if challenged after noon on 1 April. My query was on 2 April. The answer I received was on 4 April. No joke.
      Several IRCA Global staff members are applying for jobs elsewhere. One of them confirmed to me that they were informed of liquidation on 1 April.
      Regarding context, Visit the IRCA Global website to see the full business rescue proposal. It contains details of possible liquidation, which was activated by creditors, all of whom are listed.
      Most of them (excluding some smaller creditors, such as coffee providers) are listed above.

  2. It is a sad state of affairs to see one of the big names in the profession falling away, and while there will be many negative comments as to how this happened, one thing is for sure. The SA economy is taking its toll.
    Just like personal finances, when the short term insurance is the first to go when the budget no longer balances, Sheq falls by the wayside in even the largest of industry sectors, such as mining and metallurgy.
    I empahise with those who became victims. No matter how big you are, the fall still hurts. And a few valuable courses offered by IRCA may also fall away. Is this not an injury to all?

    1. Rudy, as you wrote in your article on “Trends in African Sheq professions” in January;

      “With the oil price predicted by the World Bank to reach its lowest level by the end of this year, and not seen to reach its 2013 prices within the next ten years, Sheq in the Oil and Gas industry is probably going to pay the highest price.

      “As more Middle Eastern companies cut down on capital expansion projects, many expat Sheq practitioners are likely to return to SA, bringing back some desperately needed skills to the professional pool.

      “While this may be on a positive note, new entrants and less experienced practitioners may find it difficult to find work as the market is gradually filled by the more experienced people returning.”

  3. Membership fees and registration fees are among the costs of Sheq practice, and of Sheq business.
    Some creditors in the IRCA liquidation give an indication of these costs (multiply by thirty years);

    ASSOCIATION OF MINE… 112,080
    DMR 1,042,188
    MASTER BUILDERS ASSOCIATION 4,186
    SACPCMP 24,265
    SAFETY FIRST ASSOCIATION 9,291
    SOUTH AFRICAN COLLIERY MANAGERS ASSN 4,560

    Drops from the bucket, but every drop counts. Sheq service businesses do get some returns from these and other memberships and registrations and authorities, but the cost, and the administration cost, is high.

  4. More and more organizations will feel the crunch of a slow economy. I have been with organizations who went through the business rescue process. My personal opinion is that it does not work in the South African context, since non of those organizations recovered. What is your opinion in the industry regarding the success of Business Rescue?
    I’ll miss IRCA in the industry.

  5. In 1999 when the world was still pathologically obsessed with the New Millennium, Clem Sunter wrote a book titled “Never mind the Millennium, Think about the next 24 hours”.
    Today South Africa is obsessed with the recent Constitutional Court judgment by Justice Mogoeng Mogoeng, but we need to move on to business and jobs, and focus on the liquidation of IRCA. Why did a company with a global footprint go under?
    IRCA had strategic and operational plans year after year, but they lacked a strategic philosophy. Strategic plans are ephemeral while a strategic philosophy is perennial. For example, organisations should understand that any strategy, such as a BEE strategy, or Corporate Social Investment strategy, do not amount to a strategic philosophy.
    IRCA did what a Harvard Professor in 1960 called ‘Market Myopia’. They forgot that their business offered an intangible service which was safety in which they should have zeroed-in, but they lost sight of their goal and derailed.
    They failed to scan the market locally and internationally. To a number of organisations, safety is not a value, but a priority, which change all the time. We are living in a weak economic environment globally and safety will be less prioritised when organisations are operating on a shoe string budget.
    What happened to IRCA could happen to any organisation; if the leaders do not apply lateral thinking and operate on a leadership mode, as opposed to a maintenance mode.
    It is a sad day for South Africa in that a mountain like IRCA has proverbially disappeared from our midst and be thrust into the ocean of bankruptcy, because of the dearth of strategic philosophy and failure to stick to their co-competencies.
    Dinosaurs became extinct not because nature was against them, but because they lacked a strategic philosophy and relied heavily on survival-based strategies.

  6. Ja, I grew up watching IRCA grow. They were established a year or so before the consultancy that I took on was established. It was interesting to watch them go from strength to strength. Well, at least NOSA and their vyf sterre made it on to the SHARKS jersey. Perhaps IRCA should have backed the STORMERS or the BULLS. Maybe even the LIONS. But sometimes growth is too quick and not sustainable.
    Just for interest, who are the top 5 Sheq providers in South Africa?

  7. What a pity to learn that IRCA have gone into liquidation. They were a good organisation.
    As per Koos’ enquiry, who are the current leaders in Occupational Health and Safety consulting in South Africa?

  8. I’m also very disappointed to discover that,when I visited their branch in Vereeniging when I was told the office is closed. My question is are we going to he paid back our monies for the outstanding courses,feel sorry for their employees.

  9. Also want to know if we are going to get our money back?
    My company paid in full (in advance) for the Irca Risk Maq training.

    1. Only Randburg and Rustenburg is closed down. Durban and Secunda are still open for business.

Comments are closed.

close
Facebook IconLinkedInLinkedInLinkedIn
error: Contact the Cygma Group for Copyright licence.