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.

The collapse of Hanjin, the world's seventh largest shipping container carrier, and its immediate impact in South Africa and its shipping industry, remains to be seen. As far as we can ascertain, there has been no attempt to date to apply to a South African Court for the recognition of the Korean rehabilitation proceedings.

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:

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.

Overview

The central question in the case of Re Opti-Medix Ltd (in liquidation) and another matter [2016] SGHC 108 (Opti-Medix) was whether insolvency proceedings in a jurisdiction other than the place of incorporation could be recognised by the Singapore court.

Ex parte applications were made for (a) the recognition of foreign insolvency proceedings and (b) the appointment of a foreign bankruptcy trustee, in respect of two companies (the Companies).

Background facts

Even the taxman must stand in line with other Creditors before the Liquidator. This is according to the recent Supreme Court of Appeal ("SCA") decision of CSARS v Van der Merwe NO. This appellate case dealt with a dispute about whether or not certain provisions of the Customs and Excise Act created an embargo in favour of the Commissioner of the South African Revenue Services (“CSARS”), thus preventing a Liquidator from taking possession of goods in terms of the Insolvency Act until all duty and VAT is paid.

It has already been five years since the South African legislature introduced business rescue, a corporate restructuring procedure, which given the current economic climate is a concept that most corporates should now be familiar with. Despite its progressive intentions and increasing popularity, business rescue is often abused, usually by directors and stakeholders who have in-depth knowledge of the affairs of the company, the causes and consequences of the financial demise of the company, and who are often the initiators of the process.

Ever since the Companies Act, 2008 came into force, the courts have been inundated with cases pertaining to the interplay between the moratorium established by business rescue, the creditors’ claims and the effect of the business rescue plan.

Since the inception of business rescue, misconduct by business rescue practitioners (BRPs) has been one of the biggest causes of complaint (and headaches) by creditors. More and more disgruntled creditors and other affected persons are pursuing the removal of rogue BRPs of companies in business rescue.

In terms of section 139 of the Companies Act 71 of 2008, a BRP may only be removed from office in terms of section 130, or as provided for in section 139. Furthermore, only the court is authorised to remove a BRP from office, both in terms of sections 130 and 139.

The case of Kythera Court v Le Rendez-Vous Café CC trading as Newscafé Bedfordview case number 2016/11853 GLDJ reiterated the Supreme Court of Appeal (SCA) decision in Cloete Murray NO & another v Firstrand Bank Ltd T/A Wesbank 2015 (3) SA 438 (SCA) that an agreement can be cancelled during business rescue as the unilateral act of cancellation does not constitute enforcement action in terms of s133(1) of the Companies Act, No 71 of 2008 ( Act).