The ‘dual jurisdiction’ regime has long been entrenched in South Africa’s corporate insolvency law. This principal arises from the provisions of the Companies Act, No 61 of 1973 (Old Act), which provides that jurisdiction over a company is determined by the location of both its registered address and its principal place of business with the creditor having the choice of jurisdiction.

With the enactment of the Companies Act, No 71 of 2008 (New Act), the question that then follows is: Does this principle of jurisdiction continue to apply under the New Act?

In order for an application for business rescue to successfully suspend commenced liquidation proceedings, it must be served on the Companies and Intellectual Property Commission (CIPC), together with all affected persons in terms of the Companies Act, No 71 of 2008 (Act). This position was confirmed in the Gauteng Local Division’s decision handed down on 10 March 2016.

The Supreme Court of Appeal (SCA) in Lagoon Beach Hotel v Lehane (235/2015) [2015] ZA SCA 2010 (21 December 2015) recently considered the granting of a preservation order to a foreign trustee and the recognition of a foreign trustee by our courts in exceptional circumstances.

One thing we have learnt from the hit series ‘Murder She Wrote’, other than the fact that the star of the show Angela Lansbury never aged during its 12 years of airing, is that it is often the one closest to us that does the most harm.

The restructuring of financially distressed companies is on the increase globally. In line with this international trend is Chapter 6 of the Companies Act, No 71 of 2008 (Act) which introduced business rescue into the South African corporate landscape.

Although business rescue has brought a much needed and long overdue alternative to liquidation for businesses in distress, it is also responsible for many points of contention. The most pertinent of these is currently the general moratorium found in s133 of the Act.

The South African Revenue Service (SARS) released Binding Private Ruling 210 (Ruling) on 11 November 2015. The Ruling sets out the tax consequences of a ‘liquidation distribution’, as defined in s47(1)(a) of the Income Tax Act, No 58 of 1962 (Act), followed by an ‘amalgamation transaction’ as contemplated in s44(1)(a) of the Act.

The June 2013 issue of Baseload included the article “A $400 Million Devil in the Details: The Cautionary Tale of the Chesapeake Par Call.” We published an update to that article in the January 2015 issue. On July 10, 2015, the District Court for the Southern District of New York held that Chesapeake is required to pay the noteholders the make-whole amount.

If repayment of debt is accelerated as a result of bankruptcy, are debtholders eligible to receive a make-whole premium? The answer from an increasing number of courts is, without specific language in the indenture, no. Indentures usually include specific language to protect investors by declaring that upon certain designated “bankruptcy events,” all outstanding securities issued under that indenture become immediately due and payable (without further action from the holders of the securities).

Historically, investment grade debt with a make-whole provision was fairly straightforward. At any time during the life of the instrument, the issuer had the right to redeem the debt. But the price to be paid included the discounted value of the remaining payments of principal and interest over the life of the debt. Because the cost of paying the “make-whole” is often significant, issuers seldom redeem bonds when they are required to pay the make-whole price.

The commercial landscape in South Africa was forever changed when business rescue was introduced by Chapter 6 of the Companies Act, No 71 of 2008 (Act).

The proverbial "blind leading the blind" comes to mind when one recalls the great uncertainty which existed, and to an extent still exists, in the minds of business owners, creditors, employees and even business rescue practitioners as to the meaning of certain of the provisions of Chapter 6 of the Act.