Can an application for business rescue be brought even after a company has been placed in final liquidation?  The short answer, thanks to a recent Supreme Court of Appeal ("SCA") decision, is yes.

In Richter v Absa Bank Limited 2015, an interpretation of 'liquidation proceedings' within the context ofsection 131(6) of the Companies Act, 71 of 2008 ("the Act"), was central to the issue before the SCA.  

Section 131(6) of the Act reads as follows:

There have been a myriad of decisions on business rescue proceedings since the inception of the new Companies Act 71 of 2008 (“the Act”).  More recently, our courts have considered section 153(1)(b)(ii) of the Act which introduces the concept of a ‘binding offer’.

INTRODUCTION

This section allows one affected person to make an offer to purchase at liquidation value, the voting interests of those persons who opposed the adoption of the business rescue plan.

On 12 October 2015, the Deputy Minister of Justice and Constitutional Development, the Honourable John Jeffrey indicated that we are shortly to receive a revised and consolidated unified Insolvency Bill (“Bill”).

Insolvency Law, as we know it presently is, in addition to substantial case law precedent, governed by –

The Policy Framework Behind Section 34 of the Insolvency Act 2 Of 1936 ("the Act")

The policy of this section of the Act 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:

ISSUE

Whether employees who have lodged a claim in the Labour Court against an employer that has gone into liquidation may proceed with their claim if they have not provided the liquidator with the requisite notice as required by South Africa’s company laws?

SUMMARY

In two recent cases decided in the Supreme Court of Appeal (SCA), namely,Willow Waters Homeowners Association (Pty) Limited v KOKA NO and others [2015] JOL 32760 (SCA) and Cowin NO v Kyalami Estate Homeowners Association (499/2013) [2014] ZASCA 221, the SCA was asked to consider:

Can a creditor cancel an agreement with a company in business rescue and what is the consequence of a business rescue practitioner suspending an agreement before cancellation?

The lawfulness of cancelling a contract during business rescue

As parties to litigation, creditors often find themselves in a predicament where the individual they have a claim against has assets of insignificant value. The same individual may, however, be a trustee of a discretionary trust owning substantial assets. Faced with this difficulty, creditors are left with little choice but to ask a court to 'go behind the trust' in an attempt to find assets to execute judgment against.

On 20 May 2015, the Supreme Court of Appeal (SCA) delivered judgment in the matter of African Banking Corporation of Botswana v Kariba Furniture Manufacturers & others(228/2014) [2015] ZASCA 69, dealing, amongst other things, decisively with the proper interpretation of the words 'binding offer' as they appear in s153(1)(b)(ii) of the Companies Act, 71 of 2008 (Act).

Section 134 of Act 71 of 2008 is extremely important because it is there to protect the interests of both the company in business rescue and the creditors and other third parties related to the company.