Tag archives: Business rescue

Who has the right to vote on the business rescue plan of a debtor company?

By Andrew Strachan on June 13, 2023 Posted in General

This blog was co-authored with Thokola Zungu, Candidate Attorney. When a company in business rescue is a creditor of another company in business rescue, the right to vote on the business rescue plan for the debtor company vests in the business rescue practitioners of the creditor company and not in its board of directors. The … Continue reading

What is the effect of a trustee abandoning a right of action?

By Andrew Strachan on June 12, 2023 Posted in General

This blog was co-authored with Thokola Zungu, Candidate Attorney. The Supreme Court of Appeal concluded that a right of action falls within the meaning of ‘movable property’ as defined in the Insolvency Act and vests in the trustees. Thus, by operation of the law, the trustees become the owners/holders of the right of action. They … Continue reading

Financial distress – resolution against business rescue and s 129(7)

By Tamara Gerwel on May 15, 2023 Posted in Finance

This blog was co-authored with Aqeelah Petersen, Candidate Attorney. The board of a company may resolve that the company voluntarily begin business rescue proceedings and place the company under supervision, if the board has reasonable grounds to believe that the company is financially distressed and there appears to be a reasonable prospect of rescuing the … Continue reading

The consequences of acceptance or rejection of a business rescue plan

By Patrick Bracher (ZA) on May 2, 2023 Posted in General

This blog is longer and more dense than usual. Most of it is taken directly from the precise wording of the judgment and it will be of use to anyone interested in the business process. Section 151 of the Act requires a business rescue practitioner to convene and preside over a meeting of creditors and … Continue reading

Insurance, liquidation and business rescue

By Donald Dinnie on May 19, 2022 Posted in Insurance

Insurance policies, particularly commercial policies providing business interruption, may contain provisions dealing with the consequences which flow for the parties, and the question of continuing cover and any indemnity, in the event of the liquidation of an insured. The relevant clauses are often outdated and should be reviewed having regard to the relevant provisions of … Continue reading

SCA gives clarity on the meaning of conflict of interest for business rescue practitioners

By Candice Grieve on June 4, 2021 Posted in General

SCA gives clarity on the meaning of conflict of interest for business rescue practitioners In February 2018, eight companies in the Oakbay Group were placed in voluntary business rescue. Amongst these companies were the first respondent, Tegeta Exploration and Resources (Pty) Ltd, and its three subsidiaries, Optimum Coal Mine (Pty) Ltd (OCM), Koornfontein Mines (Pty) … Continue reading

Entering into a compromise with creditors – ten things to consider

By Akhona Boloko and Shawn Barnett (ZA) on May 27, 2020 Posted in General

Companies may attempt to rearrange their financial affairs to minimise the financial impact of the pandemic (or for any other reason). Section 155 of the Companies Act provides an informal mechanism of restructuring a company’s obligations to creditors. Here are 10 things to consider when entering into a compromise with creditors: A compromise is an … Continue reading

CIPC has changed its approach to business rescue application filings during the lockdown

By Stephen Kennedy-Good, Olivia Radford and Yishika Moodley on May 6, 2020 Posted in General

Voluntary business rescue applications filed with CIPC during 24 March to 30 April 2020 will be processed by CIPC to reflect the dates on which they were filed. These applications do not have to be resubmitted. Similarly, the appointment of business rescue practitioners that were filed with CIPC during 24 March to 30 April 2020 … Continue reading

10 things to know about business rescue

By Akhona Boloko and Shawn Barnett (ZA) on April 21, 2020 Posted in General

Business rescue offers a very useful alternative to the liquidation or winding-up of a company. During and after the pandemic, many companies may have to consider whether business rescue is an appropriate response to the economic impact that COVID-19 may have had on their business. Here are 10 things to know when considering business rescue: … Continue reading

Business rescue application does not terminate provisional liquidation

By Patrick Bracher (ZA) on March 13, 2019 Posted in General

An application for business rescue does not terminate the office of provisional liquidators nor does it result in the assets and management of the company in liquidation re-vesting in the directors of the company. Where a company had been liquidated, an application was made for business rescue in GCC Engineering v Lawrence Maroos. Although section 131(6) … Continue reading

Voting against a business rescue plan

By Caroline Theodosiou and Adriaan Louw (ZA) on November 6, 2017 Posted in Banking

Creditors of a company in business rescue do not have an unfettered vote to reject a proposed business rescue plan because their vote may be set aside by a court if it is inappropriate. The Supreme Court of Appeal in Firstrand Bank Ltd v KJ Foods CC considered the meaning of ‘inappropriate’ relating to business rescue … Continue reading

Can cessions in security be suspended in business rescue?

By Riza Moosa on September 7, 2017 Posted in Banking

A cession of rights as security may include rights which only come into existence in future as in the cession of future book debts. The agreement to cede such rights requires no further action on the part of the cedent at the future time when those rights come into existence. They automatically form part of … Continue reading

Suspension of agreement in business rescue: What can a creditor do?

By Riza Moosa on August 29, 2017 Posted in Banking

The powers of a business rescue practitioner to suspend contracts has given rise to concern and speculation as to the effect of the exercise of those rights in business rescue and the implications for creditors. It has been clarified that a creditor whose agreement is suspended in business rescue has the right to withhold the … Continue reading

Business rescue asset disposals

By Riza Moosa on June 19, 2017 Posted in Banking

An owner whose property is in the possession of another without consent can recover possession by way of vindication (rei vindicatio). But what happens if the person in possession is legally permitted to sell those goods? In EnergyDrive Systems (Pty) Ltd v Tin Can Man (Pty) Ltd the Johannesburg High Court heard a matter dealing with … Continue reading

Economic and social consequences of liquidation relevant to business rescue

By Haroon Laher on December 1, 2016 Posted in General

The Supreme Court of Appeal has aligned itself with a statement by the high court that where the liquidation of a company will occasion significant collateral damage both economically and socially and destroy wealth and livelihoods, the Companies Act recognises that business rescue is the better option. Adverse socio-economic consequences like job losses should be … Continue reading

Failure to join creditors is fatal to an application to set aside business rescue proceedings

By Aslam Moosajee (ZA) on May 30, 2016 Posted in Banking

Creditors of a company have a substantial interest in an application to set aside business rescue proceedings or the adoption of a business rescue plan. A court will dismiss such an application if the creditors are not joined as parties to the application. Giving notice of the application to the creditors does not cure the … Continue reading

Failure to disclose business rescue results in setting aside of tender

By Aslam Moosajee (ZA) on April 19, 2016 Posted in General

If tender documents impose an obligation on a bidding party to disclose that it has the necessary financial resources to execute a project, the failure by the bidder to disclose that it was placed under business rescue after the bid was submitted but before the contract was awarded, resulted in the successful award of the … Continue reading

Arbitrations hit by moratorium on legal proceedings in business rescue

By Riza Moosa on October 7, 2015 Posted in Banking

Overturning a lower court judgment, the appeal court has found that arbitrations are included in the general moratorium on legal proceedings against companies under business rescue in section 133(1) of the Companies Act 2008. In Chetty v Hart, the Supreme Court of Appeal looked at the meaning of the phrase “legal proceedings” in section 133 in relation … Continue reading

Business rescue after liquidation

By Riza Moosa on June 30, 2015 Posted in Banking

If prospects of success of business rescue exist a court will allow business rescue to commence even if the company is in final liquidation. In Richter v Absa Bank Limited, the Supreme Court of Appeal pointed out that business rescue protects interests of a wider group of people than liquidation and interpreted the Companies Act … Continue reading

What is the effect of non-compliance with business rescue procedures?

By Riza Moosa on June 24, 2015 Posted in Banking

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 … Continue reading

Business rescue: binding offer to purchase voting interest is not automatically binding on creditor that votes against the plan

By Aslam Moosajee (ZA) on May 20, 2015 Posted in Banking

In an important judgment delivered by the Supreme Court of Appeal on 20 May 2015 in African Banking Corporation of Botswana Ltd v Kariba Furniture Manufacturers (Pty) Ltd and others, the Supreme Court of Appeal held that a purportedly binding offer made to a creditor, who opposes a business rescue plan, is not automatically binding … Continue reading

Moratorium in business rescue: what does it cover?

By Riza Moosa on April 9, 2015 Posted in Banking

The moratorium on legal proceedings against a company in business rescue offers critical breathing space to the company from its creditors, allowing the business rescue practitioner the opportunity to investigate affairs of the company and develop the business rescue plan for its restructure. A recent case offers a useful interpretation of the extent and implications … Continue reading

Sureties may not be affected by business rescue plan

By Riza Moosa on January 28, 2015 Posted in Banking

Without deciding the point, the Supreme Court of Appeal in New Port Finance Company (Pty) Ltd v Nedbank Limited held that the decision in Tuning Fork (Pty) Limited v Greeff may not be correct in saying that where the principal debts are diminished or expunged by a business rescue plan the sureties are released accordingly. … Continue reading

Business rescue and sureties

By Aslam Moosajee (ZA) on December 1, 2014 Posted in Banking

The latest appeal court decision of New Port Finance Co v Nedbank reinforces our view that every suretyship securing a company’s debts should specifically preserve the creditor’s rights against a surety despite discharge of any part of the principal debt by a business rescue plan and that creditors should ensure that claims against sureties are preserved … Continue reading