Court orders to assist in asset seizure and unravelling of BHI Trust

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Three recent court decisions have provided the joint provisional trustees (JPTs) of BHI Trust, with more legal authority, bringing them closer to recovering the large sums reportedly invested in the unauthorised collective investment scheme.

Craig Warriner, the fund manager and a trustee of BHI Trust, handed himself over to the authorities in early October last year. He allegedly admitted to using the trust’s funds in a highly irresponsible manner.

According to the State’s charge sheet, Warriner has confessed to defrauding about 220 people of an estimated R1.18 billion in a pyramid scheme that started in January 2013 before it collapsed in August 2023.

On 25 October 2023, the trust was placed under provisional sequestration by the High Court in Johannesburg. The Master of the High Court appointed Gert de Wet and Sumaya Mohamed of Kaap-Vaal Trust as the JPTs five days later.

Read: BHI Trust: the walls start tumbling down

On 7 February this year, BHI Trust was placed under final sequestration, which allows the JPTs to sell any assets they can find within the trust to settle debts owed to creditors.

The ruling followed the granting of two other significant court orders late last year: the provisional sequestration of Warriner (7 December 2023) and the provisional liquidation of Amalgum Investments 108 (Pty) Ltd (17 December 2023).

Sequestration vs liquidation

The difference between sequestration and liquidation is straightforward.

A natural person or a trust is placed under sequestration, and a trustee is appointed in the insolvent estate.

A company or close corporation, on the other hand, is placed in liquidation, and a liquidator is appointed to finalise the winding-up of the affairs of the corporate entity.

A provisional court order for the liquidation of BHI Holdings (Pty) Ltd was granted on 14 November. The return date for the final liquidation has been set for 19 February.

De Wet and Mohamed, the appointed JPTs of BHI Trust, are also the joint provisional liquidators of BHI Holdings.

Sequestration of Warriner

In a circular sent to creditors in November last year, the JPTs shared that the Master of the High Court authorised an inquiry in terms of section 152 of the Insolvency Act.

Numerous subpoenas have been issued for various parties involved with BHI Trust to provide information, documentation, and testimonies on the financial affairs of BHI Trust. The first of these sittings was held between 6 and 8 December 2023. The inquiry was held in camera.

Read: FSCA asks BHI Trust investors to come forward with information on FSPs

A circular sent to creditors on 17 January stated that the inquiry was postponed for four further dates in February, first, for the delivery of additional information identified by the JPTs during the first round of the inquiry by witnesses who have testified and, second, for the JPTs to summon additional witnesses who have been identified because of the JPTs’ investigations.

Because the inquiry is in camera, a report for public distribution can be made available only once the inquiry process has been concluded, and with the consent of the Master.

But the JPTs told Moonstone their investigations thus far have unearthed enough evidence – “inter alia, flow of funds from the trust to Craig Warriner in person” – to necessitate the trustees’ seeking the provisional sequestration of Warriner, “to allow for the recovery of assets or funds that in future be found as being an asset of Craig Warriner”.

“We will then have the right to further dispose or recover and in turn for the recovery of such proceeds by the insolvent estate of BHI Trust for the benefit of its investors,” the JPTs said.

The return date for the provisional sequestration to be made a final has been set for 29 February.

Liquidation of Amalgum

According to the JPTs, Warriner was not only the managing trustee of the BHI Trust but also the director of Amalgum Investments.

The JPTs said “inter alia the irregular and unlawful flow of funds from BHI Trust to Amalgum” also necessitated the application to place Amalgum in provisional liquidation.

The return date for the final liquidation has been set for 6 March.

“It must further be noted that the investigation is still ongoing in the recovery of any and all possible funds for the benefit of the investors of BHI Trust,” the JPTs said.

Joining the dots

Warriner has remained incarcerated since handing himself over last year. He initially declined to apply for bail, but BizNews reported he later applied for bail during a court appearance on 13 December. The application was denied.

While Warriner remains in prison, the JPTs stated that they managed to interrogate Warriner as part of the section 152 process.

The trustees said, “the venue, facilities, and Warriner’s inability to furnish the JPTs with documents are unfortunately slowing down and hindering a quicker resolve of the factual events leading up to the sequestration of the trust and also the recovery of the funds”.

“Warriner, however, did provide the JPTs with information, given the limited time available to the JPTs, which would appear to be reliable and could lead to further recoveries. The Johannesburg Correctional Centre greatly assisted the JPTs,” the trustees said.

Warriner’s next court appearance is scheduled for 20 March.

Investors and creditors are invited to provide the provisional trustees with any factual information that could assist the JPTs with the recovery of funds. The information provided will remain confidential. Email info@insolventbhi.com.

To read the circulars sent to creditors, visit https://www.insolventbhi.com/

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