The creditors of a company in financial distress are often faced with various options. A debtor company can either be liquidated, placed in business rescue or enter into a compromise with its creditors without first being placed in liquidation. Although an offer of compromise, at first glance, may seem very attractive to creditors, there may be many pitfalls of which creditors must be aware.

Creditors face daily uphill battles when trying to collect money from debtors. Not only has the National Credit Act, No 34 of 2005 made it more onerous on creditors to recover debts due to them, but creditors must constantly be aware of the threat of a claim prescribing.

The Prescription Act, No 68 of 1969 (Act) provides that a debt is extinguished by prescription after the period set out in the Act.

In Freshvest Investments (Pty) Ltd v Marabeng (Pty) Ltd (1030/2015) [2016] ZASCA 168, the Supreme Court of Appeal (SCA) was afforded the opportunity to pronounce on the so called Badenhorst rule which assumes its name from Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T).

Affirmative action measures were introduced in South Africa to reconcile the injustices of the past. Although policies have been implemented for the achievement of equality for persons previously disadvantaged, at what point do these policies unjustifiably infringe the rights of persons affected by them?

The Bankruptcy (Scotland) Act 2016 came into force yesterday, 30 November 2016, together with other consequential amendments and changes to the Court Rules which relate to bankruptcy in Scotland.

When considering whether or not to bring a legal action, it is important to establish if it is competent and commercially worthwhile to do so. The ability to bring, or continue with, legal proceedings against a company can be restricted if that company enters into a formal insolvency process. The position of creditors may be improved now that the Third Party (Rights Against Insurers) Act 2010 has at last been brought into force.

Sometimes different bits of legislation are, on the face of it, in conflict with each other. This is specially so when new law is introduced. The impact of new law on old law sets up contradictions, which the courts have to sort out. An interesting recent example arose in the context of business rescue.

The issue in this case was whether a payment of R389 593.49 by Ditona – a company being wound-up – to another company Eravin, was recoverable by Ditona’s liquidators as a void disposition or unrecoverable because, it was a pre-business rescue debt, which may not be enforced.

On 21 September 2016, the Western Cape High Court (Court) handed down judgement in the case of Tyre Corporation Cape Town (Pty) Ltd and Others v GT Logistics (Pty) Ltd and Others (Rogers J) [2016] ZAWCHC 124 in terms of which the Court considered, among other questions, the following:

It is now generally accepted that the Companies Act, No 71 of 2008 (Act) is an overhaul of our corporate law landscape. This shift is even more evident with the introduction of a new business rescue regime and along with it, the general moratorium on legal proceedings against a company in business rescue.

Section 133 of the Act provides that no legal proceedings including enforcement action may commence or continue against a company undergoing business rescue, save where amongst other exceptions, consent is granted by the court or obtained from the business rescue practitioner.

Bankruptcy made clearer: One of the bastions of old-style Scots terminology, guaranteed to perplex Southern audiences, is the law of bankruptcy in Scotland as it applies to individuals and assorted others.

But maybe for no longer. The Bankruptcy (Scotland) Act 2016 has reached the statute book. It’s a consolidating act, encompassing statutes from 1985, 1993, 2002, 2007, 2012 and 2014. It introduces a new and fairly modern framework, the aim being to make it less cumbersome and easier to use by those who do not have intimate knowledge of it (most of us!).