Gwede Mantashe has told Cosatu it is divided and that there is a split in its top leadership.
In an answering affidavit filed at the court for the youth league, ANC secretary general Gwede Mantashe said it was a matter of record that the affairs of the youth league were "shambolic and chaotic".
"The respondent at present has no disposable assets and its operations, which are currently limited to auditing its membership and restructuring the chaos, are being funded by the ANC," Mantashe said.
The case was set to be heard at the high court on Wednesday, but was stood down.
The liquidation application is being brought by Z2 Presentations CC, which trades as University Events Management (UEM).
No assets
This came after the youth league failed to pay an amount, with interest included, of almost R15-million to the contractor for its national congress in Mangaung in the Free State in 2008, when Julius Malema was elected leader.
The sheriff reportedly twice tried to seize youth league assets to pay off the debt, but there were no assets.
In his affidavit Mantashe said the cost of collecting and administering the annual youth league membership fee of R12 exceeded that amount.
He said the league was not a commercial business and did not operate for profit.
"The respondent, as set out in its constitution, is a voluntary association of persons with the object of pursuing and furthering the ideals of democracy, freedom, and peace through political processes.
"At present the only goodwill it has is of a political nature and not a commercial nature, and this cannot be sold for money," Mantashe said.
Separate entity
He argued that the Companies Act would not apply to the youth league.
The ANC had made some payments to the contractor, but Mantashe said the party was a "separate entity" from the youth league.
The ANC had made the payments because its youth wing did not have the funds.
However, the ANC "has no obligation to take steps to satisfy the judgment debt", he said.
UEM's lawyers argue that the Insolvency Act applies to the case. In their heads of argument the lawyers say the youth league's affairs could be wound up in accordance with the act.
"The respondent has committed acts of insolvency and is unable to pay its debts as envisaged in section eight of the Insolvency Act," they say.
Appointing a liquidator
A trustee needed to be appointed to establish where the youth league's assets were, since it was an organisation with numerous members who paid annual fees and it received donations.
Mantashe said appointing a liquidator or a trustee would not gain anything and only be a cost to creditors, as the youth league had no assets and no money in its bank account.
"Any investigation by a liquidator or trustee would be at the expense of creditors … as there is no business there is no suggestion of any hidden assets or profits which might be uncovered," he said.
UEM's lawyers said it was untenable that the league could be found to be "contracting with the world at large giving out the appearance of legitimacy" when it claimed it had no assets.
"A trustee will be able to investigate this and establish the correctness or falsity of the assertions made."
They argued Mantashe was not authorised to speak on behalf of the youth league because he was not one of its office bearers. They would ask the court to dismiss Mantashe's arguments in his answering affidavit.
Mantashe asked that the application be dismissed with costs. – Sapa