Steinhoff headquarters in Stellenbosch.
Steinhoff shares fell nearly 40% on Monday afternoon after the Western Cape High Court ruled it had jurisdiction to hear a liquidation offer against the retailer.
By 3:50 p.m., Steinhoff shares had rallied to trade down 16% on the day to Rand 3.09 per share.
In argument last week, Steinhoff claimed he could not face a liquidation hearing in a South African court because his parent company was incorporated in the Netherlands.
The group also denied being commercially insolvent.
On Monday, Justice Hayley Slingers rejected the argument that the court lacks jurisdiction to wind up the respondent. She did not provide reasons. It also rejected two requests to intervene.
Following the decision, the liquidation file will likely begin on Thursday.
The liquidation offer was filed against the retailer by former owners of shoe retailer Tekkie Town, who claim they were “tricked” into trading their shares for Steinhoff shares.
While Steinhoff argued that under the Companies Act 2008 it should be classified as an “outside company,” lawyers for Tekkie Town argued that the liquidation proceedings are still governed by an earlier version of the law, which provides for the liquidation of external companies. .
Meanwhile, voting also began Monday on Steinhoff’s proposed R25 billion settlement with creditors and plaintiffs. In a market update, the retailer said it has received backing from financial creditors and market buy-seekers as part of the South African proceeding.
Voting will continue on Wednesday and Thursday.
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