Section 154 of the Companies Act, No 71 of 2008 (Act) provides that a business rescue plan (BR plan) may provide that a creditor, who has acceded to the discharge of the whole or part of a debt owing to that creditor, will lose the right to enforce the debt or part of it. Furthermore, if a BR plan has been approved and implemented, a creditor is not entitled to enforce any debt owed by the company immediately before the beginning of the business rescue process, except to the extent provided for in the BR plan.

The legal principles relating to execution against movable property are more or less settled, less so the law relating to execution against immovable property. This is mainly because the right to housing is enshrined in s26 of the Constitution and the issue of land has become somewhat emotive and politicised in the recent past.

The government's response to the recent Insolvency and Corporate Governance Consultation has increased the emphasis on flexibility and the restructure and rescue of businesses. However, along with the recent October Budget, there are proposed reforms which are set to increase the focus and accountability for directors of companies.

Preliminary Moratorium

One of the key new proposals to be introduced with the aim of rescuing companies is a "Preliminary Moratorium".

The Dutch Supreme Court has confirmed the decision of the Amsterdam Court of Appeal, which found that the bankruptcy of the Russian based oil company, Yukos, could not be recognised in the Netherlands because it violates Dutch public policy.

The High Court of Hong Kong refused to allow a Chapter 11 Trustee to disclose a Decision from Hong Kong winding up proceedings in the US bankruptcy court. The US proceedings were commenced to prevent a creditor from taking action following a breach of undertakings given to the Hong Kong court in circumstances where the company had no jurisdictional connection with the US.

The Australian Federal Court has clarified the limitations for foreign entities and their office holders in pursuing action in Australia to access the voidable transaction provisions of the Australian Corporations Act.

In many, if not all, commercial transactions, timing is everything, either for a distressed seller or a purchaser stumbling upon a deal that may almost be too good to be true. There is often no time to waste and a deal must be closed as soon as possible. In the haste of closing a deal, whether in the form of a sale of business or a sale of assets, the parties often agree not to comply with the provisions of s34(1) of the Insolvency Act, No 24 of 1936 (Act), each willing to take the risk in not doing so.

Section 34(1) of the Act provides that:

It is trite that the purpose of business rescue proceedings is to rehabilitate companies that have fallen on hard times, with a hope of either rescuing them or to provide a better return to creditors than what they would receive on a liquidation. This was reiterated in the recent Supreme Court of Appeal (SCA) judgment of Van Staden and Others NNO v Pro-Wiz (Pty) Ltd (412/2018) [2019] ZASCA 7 (8 March 2019).

In August 2018 we reported on the TCC decision of Fraser J in the case of Michael J. Lonsdale (Electrical) Limited v Bresco Electrical Services Limited (in Liquidation) [2018] EWHC 2043. See our previous article here. Following an appeal by Bresco, the case has recently been heard by the Court of Appeal.

TCC decision

Control to Serbian Creditors- the amendments to the Serbian Insolvency Act

The recent amendments to the Serbian Insolvency Act enacted 9 December 2018 have placed more control into creditors’ hands allowing them to suggest the insolvency administrator to be appointed, as well as providing less restrictive provisions on the proposers of reorganisation proposals.