Employment contracts were previously deemed to be suspended on the date of liquidation, being the date that the application for liquidation of the company is presented and issued at court in terms of s348 of the Companies Act, No 61 of 1973 (Old Companies Act). However, this position has since changed.

Section 133 of the Companies Act, No 71 of 2008 places a general moratorium on legal proceedings, while the company is under business rescue. This provides a company with time and resources to be rehabilitated through the implementation of a business rescue plan. As a result, there is some debate as to whether creditors are precluded from perfecting their security, such as a notarial bond, under business rescue.

Frequently a debtor’s assets are sold out of bankruptcy “free and clear” of liens and claims under §363(f).  While the Bankruptcy Code imposes limits on this ability to sell assets, it does allow the sale free and clear if “such interest is in bona fide dispute” or if the price is high enough or the holder of the adverse interest “could be compelled ... to accept a money satisfaction of such interest” or if nonbankruptcy law permits such sale free and clear of such interest.

On February 5, 2016 the IRS released Chief Counsel Advice Memorandum Number 201606027 (the IRS Memo) concluding that “bad boy guarantees” may cause nonrecourse financing to become, for tax purposes, the sole recourse debt of the guarantor. This can dramatically affect the tax basis and at-risk investment of the borrowing entity’s partners or members. Non-recourse liability generally increases the tax basis and at-risk investment of all parties but recourse liability increases only that of the guarantor.

There has always been a degree of uncertainty when it comes to a business rescue practitioner’s costs and expenses incurred in the business rescue proceedings of an entity when the business recue proceedings are, for whatever reason, converted to liquidation proceedings.

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.

A long-honored concept in real property, that of “covenants running with the land,” is finding its way into the bankruptcy courts. If a covenant (a promise) runs with the land then it burdens or benefits particular real property and will be binding on the successor owner; if that covenant does not run with the land then it is personal and binds those who promised but does not impose itself on a successor owner.

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.