Van Den Heever N.O and Another v Merchant Commercial Finance 1 (Pty) Ltd t/a Merchant Factors and Another (7595/2024) [2025] ZAWCHC 317 (29 July 2025)
REPORTABILITY SCORE: 82/100 Companies — Liquidation — Payments made after winding-up application — Applicants sought to declare payments void under s 341(2) of the Companies Act 61 of 1973 — First respondent contended that s 348 does not apply when liquidation order obtained under s 130(5)(c) of the Companies Act 71 of 2008 — Payments made after winding-up application launched by creditor — Court held that s 348 applies, rendering payments void as they were made after the commencement of winding-up proceedings — First respondent ordered to repay amount of R22,452,067.10 to the liquidators, with interest.
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Case Note
Theodor Wilhelm van den Heever N.O. and Mareda Rita Bennighoff N.O. v Merchant Commercial Finance 1 (Pty) Ltd t/a Merchant Factors and The Master of the High Court, Johannesburg
Case No: 7595/2024
Judgment Delivered: 29 July 2025
Reportability
This case is reportable due to its significant implications for the interpretation of the Companies Act, particularly regarding the application of sections 341(2) and 348 of the Companies Act 61 of 1973 in the context of liquidation proceedings initiated under the Companies Act 71 of 2008. The judgment clarifies the retrospective effect of winding-up orders and the rights of creditors, thereby contributing to the body of law governing corporate insolvency in South Africa.
Cases Cited
- Montic Dairy (Pty) Ltd (in liquidation) & others v Mazar's Recovery & Restructuring (Pty) Ltd & Others 2021 (3) SA 527 (WCC)
- Mazar's Recovery & Restructuring (Pty) Ltd & others v Montic Dairy (Pty) Ltd (in liquidation) & Others 2023 (1) SA 398 (SCA)
- Eravin Construction CC v Bekker N O and Others [2016] ZASCA 30; 2016 (6) SA 589 (SCA)
- Pride Milling Company (Pty) Ltd v Bekker N O and Another [2021] ZASCA 127; [2021] 4 All SA 696 (SCA); 2022 (2) SA 410 (SCA)
Legislation Cited
- Companies Act 61 of 1973
- Companies Act 71 of 2008
Rules of Court Cited
- None specified in the judgment.
HEADNOTE
Summary
The High Court addressed whether sections 341(2) and 348 of the Companies Act 61 of 1973 apply when a liquidation order is obtained under section 130(5)(c) of the Companies Act 71 of 2008. The court found that the payments made by the insolvent company to the respondent after the winding-up application were void, and ordered the respondent to repay the amounts received.
Key Issues
The key legal issues included: 1. The applicability of sections 341(2) and 348 of the 1973 Act in the context of a liquidation order obtained under the 2008 Act. 2. The validity of payments made by the insolvent company after the presentation of a winding-up application. 3. The interpretation of the statutory moratorium on legal proceedings during business rescue.
Held
The court held that sections 341(2) and 348 of the Companies Act 61 of 1973 apply to the case, rendering the payments made by the insolvent company void. The respondent was ordered to repay the amount received, along with interest.
THE FACTS
The applicants, as liquidators of JP Kruger Rand Deals (Pty) Ltd, sought to declare payments made to Merchant Commercial Finance void under the Companies Act. The payments, totaling R23,172,067.10, were made after a winding-up application was initiated by a creditor, ABSA Bank Ltd. The court had previously granted a winding-up order, which set aside the business rescue resolution and placed the company into liquidation. Merchant opposed the application, arguing that the relevant sections of the Companies Act did not apply.
THE ISSUES
The court needed to determine whether the provisions of the Companies Act 61 of 1973, specifically sections 341(2) and 348, applied to the payments made by the company after the winding-up application was presented. Additionally, the court had to consider the implications of the statutory moratorium on legal proceedings during business rescue.
ANALYSIS
The court analyzed the statutory framework of the Companies Act, emphasizing the retrospective effect of section 348, which deems the winding-up to commence at the time of the application. The court referenced previous case law, including Montic Dairy and Mazar's Recovery, to support its interpretation that the payments made after the application were void. The court also addressed Merchant's arguments regarding the nature of the winding-up application and the timing of the payments.
REMEDY
The court ordered that the payments made by JP Kruger Rand Deals (Pty) Ltd during the specified period were declared void under section 341(2) of the Companies Act 61 of 1973. Merchant was ordered to repay the sum of R22,452,067.10 to the applicants, along with interest at a specified rate.
LEGAL PRINCIPLES
The judgment established key legal principles regarding the application of sections 341(2) and 348 of the Companies Act 61 of 1973 in the context of liquidation proceedings initiated under the Companies Act 71 of 2008. It clarified that payments made after the presentation of a winding-up application are void, reinforcing the protection of creditors' rights and the principle of concursus creditorum. The court also highlighted the importance of statutory moratoriums during business rescue and the implications for creditor claims.