Following the denial of a corporate rescue plea by the Gauteng High Court, the South African crowd-farming firm Livestock Wealth has entered liquidation.
Livestock Wealth was established in 2015 and uses its platform to assist clients in investing in real, expanding agricultural assets including macadamia trees, organic garden tunnels, free-range oxen, and cattle breeding.
The business strategy gives investors the chance to invest in these assets, which are unaffected by financial market trends, while enabling farmers who cannot afford to grow their business to access finance through its network of small-scale partner farmers and online investors.
According to Disrupt Africa, the firm raised ZAR10 million (US$550,000) in 2022 from the Mineworkers Investment Company (MIC) via the Khulisani Ventures investment vehicle to further its global expansion.
The Financial Sector Conduct Authority (FSCA) began looking into Livestock Wealth in 2024, claiming that it might not have the required licenses and hence be operating illegally. A ZAR50,000 (US$3,000) fine was imposed on Livestock Wealth and its founder Ntuthuko Shezi for deceitfully displaying the FSP licence number of a dormant subsidiary on the main operating entity’s website, despite the investigation’s conclusion earlier this year that Livestock Wealth’s primary agricultural offerings did not qualify as “financial products” under the FAIS Act.
Meanwhile, Khulisani Ventures became concerned about the absence of financial information it was contractually entitled to as part of its 2022 convertible note deal, and Livestock Wealth has been beset by investor complaints of missing withdrawals and delayed redemptions.
The company placed Livestock Wealth on notice of default in December 2023, but the startup was unable to resolve the claimed violations, and in June of the following year, a default was announced. Livestock Wealth declined to pay Khulisani Ventures’ demands for rapid repayment of the due capital and interest, therefore the VC firm filed a liquidation action and served a statutory demand.
Shezi then submitted an application for business rescue, arguing that even though Livestock Wealth was “financially distressed,” there was a plausible chance that company could be saved. The Gauteng High Court has now denied that application, stating that the rescue plan did not satisfy the legal requirements.
“The applicant must provide a factual foundation or cogent evidential basis showing why rescue is reasonably attainable. Vague statements such as that funding may become available, contracts may revive, or profitability may return, without evidential support, should be rejected,” wrote Acting Judge JF Pretorius.
The Master of the High Court now owns all of the startup’s assets after the court concurrently ordered Livestock Wealth (Pty) Ltd’s final liquidation. Creditors will be asked to substantiate their claims, including any retail investors who used Khulisani Ventures and the platform.
