Court ruling leads to business rescue for Azrapart, owner of Fourways Mall

The South Gauteng High Court has put Azrapart, which owns half of South Africa’s largest shopping center, Fourways Mall, under business rescue after it was unable to pay Investec and First Rand Bank R2.8 billion.  

Azrapart's only business activity relates to the joint ownership and management of Fourways Mall, a super-regional shopping centre in Fourways, Johannesburg. The other half of the mall is owned by listed fund APF. Azrapart is controlled by Eriologix, which is in turn controlled by the Michael Family Trust. 

The ruling caps off a series of court matters, including one in March in which both Investec and First Rand Bank, acting through its Rand Merchant Bank, argued that Azrapart owed them R2.3 billion, which it was unable to pay. “As a result, the court found that there is no doubt strong indications that the first respondent is in financial distress,” the latest ruling handed down earlier this month stated. 

To further complicate matters, in May 2024, the Competition Tribunal decided that the two banks that successfully placed Azrapart under business rescue, could take control of the mall owner in a bid to restructure Azrapart’s debt.  

In March this year, Azrapart argued that it was in the process of finalising a transaction with Redcore Hospitality, a company registered in the United Kingdom. In terms of this transaction, it would receive a capital injection of R2.6 billion.  

This, the mall owner argued, would enable it to pay its debt. “In an affidavit filed on behalf of the first respondent, there was an undertaking that the first respondent [Azrapart] would make payment of the R2.6 billion so received to the applicants [Investec and First Rand], which would be more than sufficient to cover the liability of the first respondent towards the applicants.”  

In the March ruling, the issue arose of whether this amount would be paid, and final judgment for the banks’ application to have Azrapart placed under administration. Between March and June, Azrapart filed several applications indicating that the cash injection would be forthcoming. 

However, a subsequent investigation revealed that Redcore didn’t actually have the money it needed to pay Azrapart.  

“It appears then that, having regard to all the information placed before it, this Court still cannot find with any measure of certainty that the R2.6bn will be transferred to the first respondent by Redcore. It follows that the first respondent should now be placed in business rescue,” the South Gauteng High Court said in June. 

It added that this will “enable the independent rescue practitioners to assess any agreement with Redcore, and if determined viable, to pursue such transactions further in the first respondent’s business rescue proceedings”.  

Under the latest ruling, Piers Marsden and Lance Schapiro have been appointed as joint interim business rescue practitioners. As part of the process, the mall owner has been placed under supervision.  

The Fourways Mall partnership came about in 2015, when the Competition Tribunal approved a merger between Accelerate Property Fund and Azrapart, owners of property in the Fourways area. “It was found that neither merger would have an impact on competition,” it said.

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