A failure to comply with the business rescue procedure timelines in Section 129(3) does not terminate the business rescue proceedings. Only a court can terminate those proceedings. This does not however mean that the time periods should be ignored. To avoid any court challenges the time periods stipulated must be complied with.
Business rescue is commenced by way of a board resolution or by a court order. After passing a board resolution certain procedures need to be complied with within specified time frames. Affected persons may however apply to court to overturn the board resolution. Restrictions are placed on who may bring these applications and when.
After the resolution has been passed it must be filed with the Companies and Intellectual Property Commission. Thereafter notice must be given to every affected person and the business rescue practitioner must be appointed, each within five days after filing the resolution.
What happens when the time periods referred to in Section 129 (3) have not been complied with?
Earlier cases varied in their approaches between strict compliance and substantial compliance in regard to the consequences of late filing of the resolution and the subsequent specified steps.
In Panamo Properties (Pty) Ltd v Nel and Another NNO , the Supreme Court of Appeal applied the interpretation principles expressed in Natal Joint Municipal Pension Fund v Endumeni Municipality and held that only a court order can terminate business rescue proceedings including proceedings that miss time limits. This interpretation avoids the absurdity that would arise from a trivial non-compliance with a time period.