Educor, a private higher education group already grappling with the deregistration of four colleges, faces further challenges as Nedbank seeks to liquidate one of its property arms due to outstanding loans.
Also read: Graft, jobs, immigration – South Africa’s key election issues
The liquidation bid intensifies pressure on Educor, which also owns City Varsity, Damelin, ICESA City Campus, and Lyceum College, along with four property companies. This development comes amidst student backlash following the Department of Education’s decision to deregister the four colleges over financial reporting failures.
Minister of Higher Education Blade Nzimande criticised Educor’s leadership, citing issues such as giving marks based on unmarked exam scripts due to unpaid lecturers and abrupt campus closures. Educor was instructed to phase out its 13 000 students, though their qualifications would remain valid.
According to News24, Educor plans to contest the decision while facing Nedbank’s bid to liquidate one of its property companies. In November 2023, preceding the Department’s deregistration of Educor’s four brands, Nedbank initiated a liquidation application for Lococo 3. The matter is pending. Nedbank’s legal move stems from three substantial loans negotiated with an Educor property group owning five Durban properties.
Between May 2016 and August 2018, the bank issued three loans totalling R46 million to Lococo 3. To accommodate repayment, the loan terms underwent multiple revisions. Lococo 3 asserts that the Covid-19 pandemic severely impacted Educor’s financial stability, citing restrictions on student attendance at lectures and residences.
Allegedly, a new ‘restructuring agreement’was reached with Nedbank post-pandemic to alleviate payment obligations, a claim disputed by Nedbank. Following the bank’s liquidation bid last year, Lococo 3 sought court intervention at the KwaZulu-Natal High Court in Durban, requesting proof of the agreement as part of the discovery process.
According to the property group, the purported new loan agreement extended its debt repayment timeline to 10 years, potentially averting liquidation if proven. However, Nedbank contests the existence of such an agreement, asserting no documents were ever signed.
Judge Rob Mossop, in a recent ruling, noted that Lococo 3 couldn’t produce the agreement as it doesn’t exist in written form yet. Consequently, he dismissed Lococo 3’s bid as speculative but left room for reconsideration during the forthcoming liquidation case hearings.
This setback adds to Educor’s woes as the Lococo case is just one of ten liquidation cases Nedbank intends to pursue, with the defendants in the other nine cases undisclosed.
Also read:
Swartland, Overstrand and Mossel Bay K-9 and RSUs arrest 21 suspects in single week
Picture: Papi Morake / Gallo Images