Tag archives: Business rescue

Business rescue application does not terminate provisional liquidation

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

Business rescue asset disposals

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

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

Arbitrations hit by moratorium on legal proceedings in business rescue

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

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

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

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?

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

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

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

Can you claim against a surety if the debtor is in business rescue?

Every suretyship securing a company’s debts should specifically preserve the creditor’s rights to recover from the surety despite discharge of the principal debt in a business rescue plan. And every business rescue plan should, if possible, contain a provision preserving rights against sureties. If a debtor company is in business rescue, its creditors may call on … Continue reading

Possible business rescue orders

A court can issue an order placing a company in business rescue if it is shown that the company has reasonable prospects of being restored to a continued solvent existence or of achieving a better return for creditors and shareholders than would result from immediate liquidation. The supreme court of appeal made this finding in Oakdene … Continue reading

What must be proved in a business rescue application

The supreme court of appeal in Oakdene Square Properties v Farm Bothasfontein (Kyalami) gave some useful guidance about what should be in a business rescue application: A party seeking business rescue must show that there is a reasonable prospect of the company being restored to existence on a solvent basis or being restructured to give … Continue reading
LexBlog