Facility agreements ordinarily oblige a borrower to prepay the facility on the occurrence of certain events, including, if a borrower receives insurance proceeds or asset sale proceeds during the loan term. The rationale for this is that lenders wish to use this unexpected windfall to mitigate the risk of non-payment. This is also the approach of the Loan Market Association (LMA) in its standard facility agreements.

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.

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?

1. Applicable Law

1.1.1 Interim measures in Scotland are governed partly by court procedure rules and partly by statutory provisions. The relevant court procedures are determined by:   

• the nature of the interim measure sought; and
• the court from which the interim measure is sought.

1.1.2 There are two levels of court which may grant interim measures in civil proceedings, namely:   

Whilst there is evidence that, especially in the retail market, the number of store closures and resulting empty units is at its lowest level since a peak in 2012, high profile announcements such as that of BHS mean that they are still a reality. The Court has, with this decision, provided a timely reminder of the principles of surrender by operation of law of which landlords, tenants and guarantors should be mindful.

Summary 

A recent Scottish Inner House decision provides an overview of the approach to be taken in Scotland to interpreting performance bonds. The decision notes that the degree of compliance required when making a call may be strict, or not so strict, depending on the construction of the bond. The court’s decision also refers to the commercial purpose of the bond being key and may suggest that a more lenient approach to performance bonds is to apply in Scotland.

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.