In the case of BP Southern Africa (Pty) Ltd v Intertrans Earl SA (Pty) Ltd & Others (34716/2016) [2016] ZAGPJHC 310 (25 November 2016), the court had to consider two important issues: firstly, whether suspension of a contract by the business rescue practitioner in terms of s136(2)(a)(i) and (ii) of the Companies Act, No 1971 of 2008 (Act) suspends not only the obligations of the business rescue practitioner to perform in terms of the contract entered into between the parties, but whether it also suspends the obligations of the other contracting parties.

The Policy Framework Behind Section 34 of The Act

The policy of the law is to afford protection to a trader's creditors against his dispossessing himself of his property without paying his debt before the disposition or from the proceeds thereof. This framework policy is well set out in the case of Paterson vs Kelvin Park Properties CC (1998) 1AII SA 22 (E) where it was held:-

On 1 September 2016, Hanjin Shipping Co Limited ('Hanjin') successfully applied for and obtained an order whereby it was placed under rehabilitation. Such an order was obtained within 24 hours of the company making application to the Korean courts, without notice or input from other interested parties, most notably Hanjin's creditors.

Business rescue was introduced by the 2008 Companies Act and commenced in 2011. It provides for a regulated process in terms of which a company in financial distress is allowed the opportunity of engaging with its stakeholders and creditors to find a solution, which generally would result in the recue or restructuring of its financial affairs.

Acceleration clauses are commonly found in loan agreements that require debtors to make repayment in instalments. A standard acceleration clause provides that if a debtor fails to pay an instalment, the creditor may elect to terminate the loan agreement and demand payment of the full amount owing under the agreement.

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.

In the recent case of Constantia Insurance Company Limited v Master of the High Court, Johannesburg (23968/2015) [2016] ZAGPJHC 121 the High Court considered whether the provisions of the Insolvency Act, No 24 of 1936 (Act) permit the Master to consider liquidators’ additional submissions in response to a creditor’s substantiation of its claim.

The Supreme Court of Appeal (SCA) in Swart v Starbuck & Others 2016 ZASCA 83, reaffirmed the necessary authorisation for a trustee of an insolvent estate to sell an insolvent estate’s immovable property.

Mr Swart’s estate was finally sequestrated on 1 November 2005. On 24 January 2006, three provisional trustees were appointed by the Master of the High Court. At the time of Mr Swart’s provisional sequestration, he owned certain immovable properties (Properties).

In Roering & Another NNO v Mahlangu (581/2015) [2016] ZASCA 79 heard recently, the Supreme Court of Appeal (SCA) considered the circumstances that might justify a witness under subpoena applying for enquiry proceedings to be set aside or for the witness to be excused from attending those proceedings.

The general rule is that a subpoenaed witness is compelled to attend, subject to procedural requirements being met, and the evidence sought being relevant to the insolvent company or entity.

In Umso Construction (Pty) Ltd v Member of the Executive Council for Roads and Public Works Eastern Cape Province and Others ((20800/2014) [2016] ZASCA 61), the Supreme Court of Appeal considered the legal position where, following the award of a tender, it is discovered that the preferred bidder had been placed under business rescue during the bid evaluation process.