In recent years, the Companies and Intellectual Properties Commission (“CIPC”) (and its predecessor, the Companies and Intellectual Property Registration Office (“CIPRO")) has been carrying out mass de-registrations of companies and close corporations for failure to file their annual returns. This phenomenon, and its severe negative effects on third party creditors, has been the focus of much legal scholarship. However, a short while ago it came to our attention that CIPC’s de-registration campaign also extends to companies that have been placed in liquidation.
- In our business rescue training workshops prior to the implementation of the Companies Act, No. 71 of 2008, clients were advised that where the debt of a debtor is compromised in terms of a business rescue plan, the debt of the surety and co-principal debtor may be extinguished because of the accessory nature of the suretyship debt to the principal debt.
Consider the following commonly encountered scenario: A creditor had instituted litigation proceedings against Company X and obtained a default judgment against it. Pursuant to the judgment the creditor issued a writ of execution, but is now faced with the situation where an affected person has brought an application in terms of section 131(1) of the Companies Act 71 of 2008 (the Act) to place Company X under supervision and to commence business rescue proceedings. What is the effect on the creditor?
In this article we investigate whether, in South African law, a subordination agreement could constitute a "voidable disposition" as defined in section 26 of the Insolvency Act 24 of 1936 (the Act).
Section 26 of the Act provides that every disposition of property not made for value may be set aside by the court, if the disposition was made by an insolvent (whether an individual, company or close corporation) either:
Although business rescue may be a good tool for the purpose of turning around financially distressed businesses, it also opens the door for abuse by unscrupulous debtors.
A business rescue application may be brought at any time during liquidation proceedings, even after a final winding-up order has been granted, right up until the point where a final liquidation and distribution account is confirmed by the Master of the High Court.
A lot is written about structuring robust intellectual property licensing programs, whether from the perspective of licensors or licensees of intellectual property rights. This requires a careful consideration of legal, tax and regulatory issues that impact on the licensing arrangement.
The legal risks can’t always be managed adequately through the careful negotiation and drafting of a licence agreement. Some of these risks need to be managed independently of the drafting of any agreements.
The Minister of Justice and Constitutional Development (the Minister) has recently determined a policy on the appointment of insolvency practitioners, which was published in theGovernment Gazette No 37287 on 7 February 2014 (the policy). This policy, once it commences, will replace all the previous policies and guidelines that are currently being utilised by the Master's offices to appoint insolvency practitioners and its stated intention is to "form the basis of the transformation of the insolvency industry".
An interesting judgment was delivered by the Honourable J Majiki on 19 of November 2013 in the Eastern Cape High Court, Port Elizabeth. The first and second applicants under case 3521/2012 were ABSA Bank Limited and Maria Ramos respectively.
Section 153 (1)(b)(ii) of the Companies Act 71 of 2008 (the Act) is intended to afford a remedy to affected persons who support a business rescue plan that has been
The section can be broken down into five key elements:
It has a long been a principle of company law that the debts of a company are not the debts of its shareholders. It may be a surprise to some that this principle does not apply to certain tax debts thanks to section 181 of the Tax Administration Act No.28 of 2011 (“section 181”). This section allows shareholders to be held jointly or individually liable for the tax debts of their company. At first glance it seems unfair to punish those who do not manage the day-to-day running of a company.