Court halts rescue plan for EH Walton

ONE of South Africa's oldest packaging companies, EH Walton Packaging in Port Elizabeth, is once again in financial difficulty.

On Tuesday, the Port Elizabeth High Court ordered that a business rescue application by the company be set aside, after a preferred creditor and the former managing director of the company, Alan Clarke, had filed for the rescue plan to be stopped.

While Clarke's lawyer, Hanli Share of Kaplan Bloomberg Attorneys, confirmed that the order was granted to stop the business rescue, she did not want to comment further.

In Clarke's heads of argument, it is stated that a director at EH Walton had filed for voluntary business rescue on October 30.

"The grounds of the application are that the first respondent [EH Walton] is not demonstrably financially distressed; that the decision to begin business rescue proceedings is motivated in large part, if not solely, to avoid compliance with an order of the Labour Court reinstating the applicant [Clarke] into his position as the managing director of the first respondent, together with the payment of an amount of about R3-million owed to him by way of arrear wages, and for lack of compliance with the procedural provision of sections 129 (3) and (4) of the Companies Act."

Clarke's services were terminated in August 2012 for alleged misconduct but the Commission for Conciliation, Mediation and Arbitration in September last year found the dismissal unfair and said Clarke had to be reinstated as well as compensated for the arrear wages within 14 days.

This did not happen and in October and last month two warrants of execution and attachment of the company's moveable assets were issued for Clarke to recover his money.

Clarke was notified last month of business rescue proceedings, which effectively means that there is a moratorium placed on legal action for the period of the business rescue.

EH Walton's legal representative, Andre Vlok of Andre Vlok Attorneys, confirmed that the business rescue plan was set aside on Tuesday.

"We are looking at all the options available to the company at the moment, which includes liquidation," he said.

Vlok was not able to comment on the way forward yesterday, but said negotiations were at a sensitive stage.

The PE office of EH Walton referred a request for comment  to the Johannesburg-based Asha Chhita, who is a manager at Golden Era Group.

Chhita did not respond to several queries yesterday.

It is the second time the company has applied for business rescue in two years, but the company was saved in 2012 when the Golden Era Group paid an undisclosed cash sum for 100% ownership of the company.

While EH Walton employed 450 workers in 2012, it now employs between 200 and 250 people.

Representing some of the workforce, SA Typographical Union regional secretary-organiser Selwyn Felix said yesterday he was still awaiting communication from the company on the court action.

"If the company had to close it would be a very sad thing for Port Elizabeth and the workers, who are waiting nervously and are hoping to keep their jobs just before Christmas," he said. - Cindy Preller