The Golden Lions Rugby Union is "hopelessly insolvent, both factually and commercially", its former equity partners said in court papers filed in the South Gauteng High Court.
The Guma Tac group has taken steps to liquidate the GLRU to regain multi-million rand loans.
Guma Tac, which is jointly owned by Robert Gumede and Ivor Ichikowitz, cut ties with the GLRU in June 2011, shortly before it was to have purchased a 49.9 percent stake in the union.
"The object of the application is to bring about the winding-up of the respondent on the ground that it is unable to pay its debts," Guma Tac said in the affidavit.
The former potential equity partners claimed in the court papers that the GLRU owed Guma Tac in excess of R8 million and Ichikowitz more than R2 million.
"As will appear from the annual financial statements of the respondent (the Lions) over three years, the respondent's financial position has deteriorated to a position where its liabilities exceed its assets by tens of millions of rands," the court papers read.
It also revealed that the Lions' auditors Price Waterhouse Coopers already in December 31, 2008 reported that the union's "liabilities significantly exceed its assets and that the ablate of the company to continue as a going concern is uncertain".
In a table it demonstrated that the Lions' total liabilities exceeded its total assets by R48.6 million in 2007 which ballooned to R73.9 million by December 31, 2010.
In the affidavit the applicants claim that if they had not advanced any payments to the Lions, the union would have been unable to pay the players' salaries.
"It would have been in breach of its contractual obligations and in all likelihood lost most of its players, including its top senior players, and placed the respondent in a position with no choice to join other financially stable teams.
"The applicants' funding allowed the Lions to pay for the salaries of the players, coaches and staff, to buy both the international and local players, and employ other value adding staff to improve the team's performance culminating in them winning the Currie Cup in 2011."
Guma Tac said they paid staff salaries in January 2011 before the start of the Super Rugby season of which R821,185 went towards staff payroll, more than R4 million for players' payroll, and R171,000 to Lions conditioning coach Wayne Taylor.
The group also paid an extra R400,000 to the Lions to pay the monthly grants for the GLRU's 24 amateur rugby clubs.
Despite Guma Tac's claims, the Lions have denied in media reports that they could be liquidated.
"Until we are given a full disclosure on the claim, we cannot pay back any of the alleged 'loaned amounts' to the GLRU," GLRU president Kevin de Klerk said earlier in the week.
Guma Tac claimed the Lions disputed the loan because their agreement was never put in writing.
It further claimed that the union approached Absa bank for an extension on its overdraft in October 2011.
The bank, however, was only willing to grant an extension if the Lions could provide a letter from Guma Tac confirming future funding.
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