Omuthiya Spar (Stream Two Properties Close Corporation) is on the cusp of closure after the Spar Group instituted urgent legal proceedings to have it liquidated over alleged debts in excess of N$103 million, Business Express can reveal.
Documents seen by Business Express show that Stream Two Properties Close Corporation trades as ‘Omuthiya Spar’ and ‘Omuthiya Tops’.
In their main claim, the Spar Group notes that Omuthiya Spar is indebted to them in the amount of over N$103 million (excluding interest), which amount is currently due, owing, and payable by Omuthiya Spar to the Spar Group.
“The purpose of this application is to seek the winding-up of the respondent on the ground that it is commercially insolvent and unable to pay its debts as they fall due for payment in the ordinary course of its business, as contemplated in sections 68(c) and 69(1)(c) of the Close Corporations Act 27 of 1988.
“As will appear from what follows, the respondent is indebted to the applicant in the amount of N$103,288,557.89 (excluding interest), which is currently due, owing, and payable by the respondent to the applicant,” alleges the Spar Group in court documents seen by Business Express.
Business Express also understands that this indebtedness arises as a result of the balance due, owing, and payable in respect of stock sold and delivered on credit and ancillary services rendered by the Spar Group to Omuthiya Spar; an acknowledgement of debt agreement concluded between the the two and, inter alia, the Spar Group in August 2022; and a guarantee and indemnity agreement concluded between Omuthiya Spar and, inter alia, the Omuthiya Spar in August 2022.
Documents also show that Omuthiya Spar is part of the Nekomba group, which also owns Okahandja Build it and Omuthiya Build it.
In their submission to the Courts, the Spar Group highlighted that they hold security for their claim against the Omuthiya Spar by way of a general notarial bond (BN012/2021) registered over the movable assets of the respondent for a capital sum of N$8,500,000.00, which they perfected on 23 March 2023.
They also hold security for their claim against the retail outlet by way of a continuing covering mortgage bond (85098/2022) registered over mmovable property of Omuthiya Spar for a capital amount of N$5,000,000.
Again, they hold security for their claim in terms of its reservation of ownership over stock, which the applicant supplied to the respondent.
Stream Two Properties Close Corporation responds
Through its sole owner, Herman Ando Nekomba, Omuthiya Spar has in recent weeks also filed court papers in its defence opposing the application and claims brought by the Spar Group.
In the papers also seen by Business Express, Nekomba alleges unfair business practices by the Spar Group that have prejudiced his business.
“I file this application with considerable difficulty because the respondent’s business has been unlawfully and effectively expropriated by the applicant through a master management agreement and other related agreements, including a special power of attorney. I executed under pressure from the applicant, who was using its huge and stronger bargaining position.
“The Master Management Agreement on the basis of which the Applicant has taken over the Respondent’s business as if it were a member (in a manner incompatible with the Close Corporations Act, 26 of 1998, and good corporate practices) is unenforceable as it is against public policy and the rule of law,” Nekomba says while desposing an affidavit.
He goes on to say that the associated and prior credit agreements and suretyships are also unenforceable on the basis of the allegations he made in the answering affidavit in another associated case for the sequestration of his estate in the matter between The Spar Group Limited v. Herman Ando Nekomba, Case No: HC-MD-CIV-ACT-GEN-2024/00281.
“I wish to state that the applicant has abused its stronger bargaining position and the purported unenforceable management agreement to mismanage the respondent’s business and Stream 2 and Stream 10’s businesses.
“It has also withdrawn huge amounts of money from the three businesses’ accounts and has since refused to give a satisfactory explanation. The total amount withdrawn in such circumstances is over N$30 million over a relatively short period of time. I refer to the spreadsheet attached to the answering affidavit in the sequestration matter. I also refer to the attached answering affidavit in respect of instances of mismanagement and the ground upon which the credit agreements, the management agreements, and other associated agreements are unenforceable,” Nekomba affirms before providing responses to various allegations that had been made by the Spar Group.
In one of the responses, Nekomba says, “I deny that the respondent is commercially insolvent and unable to pay its debts as they fall due. Had it not been for the applicant’s action to take over the respondent’s business, which was performing satisfactorily, good progress would have been made in the settlement of the debts (upon being verified and proved) without prejudicing creditors and the respondent’s business operations.”
In another key submission, Nekomba denies the amount said to be owed, noting that while an amount that should be significantly lower than N$100 million may be due to the applicant, the amount claimed is definitively incorrect for many reasons.
“These include the fact that the applicant’s employees were involved in fraud and mismanagement. The applicant then changed its management during 2022, resulting in it resorting to thumb sucking amounts as demonstrated in the sequestration application’s answering affidavit attached hereto.
“The amount must have been paid by the applicant or at least ought to have been paid by the applicant from the business bank account of the respondent over a period of more than a year. There had not been accountability and transparency on the applicant’s part,” says Nekomba.
Business Express also understands that the Spar Group has also offered a response to Nekomba’s submission, which has also been responded to as the battle continues before the Courts.
The case is assigned to High Court Judge, Orben Sibeya.
At this stage, it is unclear how this case will be resolved, as deliberately it is currently still being done.
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