Leading Port Elizabeth construction and building company Omega Civils (Pty) Ltd has opted for voluntary liquidation, leaving contractors unpaid, at least 150 employees without jobs, and causing delays to roadworks.
The decision to liquidate, although done in a low-key manner by special resolution through the Master of the High Court, did not come as a surprise to employees, who said things had started going downhill for the once-thriving business in 2015.
The company, situated in Walmer, opened its doors in 1994 and was responsible for four contracts that the Nelson Mandela Bay municipality has now terminated.
The municipality had written to Omega Civils about its intention to cancel the contracts for the surfacing of gravel roads.
E-mails between the city and Omega Civils, dating back to December 2018, detail how the city had given the contractor an ultimatum for poor performance.
Omega Civils was eventually instructed to vacate the site with immediate effect on January 31.
It was also informed that it would be registered on the National Treasury’s database for five years as a defaulting supplier.
It is understood that some of these roads were in Colchester, the northern areas and Bay townships.
Two former employees said they had been told in a park two days before the close of business in December that the directors – Mpilo Ndlaleni, Nathan Pillay and Stuart Riddle of Patensie – had opted for voluntary liquidation.
In a letter to each of the employees, insolvency practitioner Monica Cowen wrote: “The above company was liquidated by special resolution [voluntary liquidation] on 11 January 2019.
“We wish to inform you that in terms of Section 38 of the Insolvency Act, your contracts of employment are suspended with immediate effect.
“In addition, no benefits in terms of the Basic Conditions of Employment Act accrue to an employee arising out of any contract of service that is suspended.”
The workers were told further that they were now entitled to apply for UIF.
A senior foreman at Omega Civils said that, without warning, he had been left unemployed, cash-strapped and uncertain about his future.
He now had to rely on family to support him. The 39-year-old father, who asked not be named, said the last salary he had received was three months ago.
And for at least a year before that, he and his colleagues had been paid sporadically.
Ndlaleni declined to comment on the matter, saying only that it had been a “very bad experience”.
Numerous attempts to reach Pillay and Riddle for comment were unsuccessful.
Omega Civils’ lawyer, Herman Bekker of Golderg & De Villiers, referred questions to the liquidator.
Thandolwethu Gebengana, 44, the owner of Eastern Force Security, started a business relationship with Omega Civils in 2009 by providing security guards at its construction sites.
He said things had gone smoothly in the beginning.
“For the first three years, they paid on time.
“Then, in 2012, the payment system changed to 30 days [after service], and in 2015, that is when the problems started.
“I did my last work for them during a project in Bethelsdorp in 2016, and I have still not received full payment for that.
“Some time in 2017, they tried business rescue and I received R13,000 of the R74,000 owed to me, but I have not received a cent since November.”
Gebengana said he was still owed R61,000 and the liquidation was news to him.
“I tried contacting the company but no-one got back to me,” he said.
“Eventually I went to the premises in December and their doors were shut.
“I am still waiting for someone to contact me with regards to my money.”
Port Elizabeth lawyer Paul Bester, who is not involved in the matter but was commenting in general, said companies sometimes opted to go straight to the Master of the High Court instead of through the court system to keep the liquidation private.
Bester, who deals with many high-profile liquidation matters, most notably that of EP Rugby, said because it was a voluntary liquidation, there was not an opportunity for interested parties to oppose the proceedings.
The next step was to hold a second meeting with the creditors and for the company’s assets to be calculated.
On March 16 2017, Algoa Brick (Pty) Ltd applied to the Port Elizabeth High Court to have Omega Civils wound up.
But just 15 days later, it filed a notice for the matter to be removed from the court roll after a payment dispute between the two parties was settled out of court.
But Omega Civils, similarly, faced payment battles with the municipality and, in January 2016, the high court ordered the municipality to settle its account with the company totalling R1.8m.
In that instance, Omega Civils had not been paid for construction on the IPTS pilot route.
The former Omega Civils foreman said they had realised in 2017 that the business was suffering.
“The amount of work started decreasing and suppliers stopped providing material due to nonpayment,” he said.
“It was once the two construction managers and the guys who tender for us left in 2017 [that] the resignations started.
“Two or three people would resign each month.
“Now Riddle can’t be reached for advice or simply to talk. As it stands, there is no one in the Omega Civils offices and I believe all the equipment is meant to be auctioned off, so obviously there is no money.”
Another former employee, who also did not want to be named, said he had been a manager at Omega Civils since 2015.
“This has knocked me financially and I’m not going to leave it lying down.
“October was the last time I received a full salary.”
The letters to the Omega Civils employees stated further: “Dividends in respect of claims are paid to creditors only after confirmation by the Master of the High Court of a [final] liquidation and distribution account.
“Claims will take time to be processed and to be paid out should there be sufficient free residue funds available.”