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[2018] ZAWCHC 11
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South African Bank of Athens Limited v Zennies Fresh Fruit CC, Business Partners Limited v Zennies Fresh Fruit CC and Another (7681/17) [2018] ZAWCHC 11; [2018] 2 All SA 276 (WCC); 2018 (3) SA 278 (WCC) (1 February 2018)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE NO 7681/17
In
the matter between:
THE
SOUTH AFRICAN BANK OF ATHENS
LIMITED
Applicant
(Registration
No 1947/025414/06)
vs
ZENNIES
FRESH FRUIT
CC
Respondent
AND
CASE NO. 24618/2016
In
the matter between:
BUSINESS
PARTNERS
LIMITED
Applicant
(Registration
No 1981/000918/06)
and
ZENNIES
FRESH FRUIT
CC
First
Respondent
(Registration
No 1999/024067/23)
ZENOPHANE
DENVER SCHROEDER
Second
Respondent
(Identity
No [...])
JUDGMENT 1 FEBRUARY 2018
KUSEVITSKY
AJ
:
[1]
This dispute concerns two applications, being case numbers 24618/2016
and 7681/2017, which were consolidated as they both relate
to a
common Respondent, Zennies Fresh Fruit CC, (“Zennies”).
Both Applicants are seeking a declaratory order that the
Business
Rescue Proceedings in respect of Zennies have ended or lapsed in
terms of section 132(2)(c)(1) of the Companies Act No
71 of 2008
(“the Act”). Zennies on the other hand refutes that the
business rescue proceedings have been terminated
and aver that the
Applicants are not entitled to proceed against it in terms of Section
133 of the Act which places a general moratorium
on legal proceedings
against a company.
THE
PARTIES
Business
Partners Limited
[2]
Business Partners Limited (“Business Partners”) is the
Applicant in case number 24618/2016. The First Respondent
is Zennies
and the Second Respondent is Zenophane Denver Schroeder (“Schroeder”)
who signed a deed of suretyship in
favour of Business Partners for
the performance of Zennies obligations to it. Business Partners is
seeking judgment against First
and Second Respondents jointly and
severally, the one paying the other to be absolved for monies loaned
and advanced in terms of
loan and royalty agreements entered into
between them. As security for its indebtedness, Zennies caused
a covering mortgage
bond to be registered in favour of Business
Partners on several properties in Gouda. Furthermore, as security for
Zennies debts,
the Second Respondent Schroeder, caused a surety
mortgage bond to be registered in favour of Business Partners over a
further property
in Durbanville.
[3]
On the 14 February 2017, Business Partners applied for judgment and
execution of the properties.
The
South African Bank of Athens Limited
[4]
On the 16 May 2017, the South African Bank of Athens (‘the
Bank”) brought a liquidation application against Zennies
by
virtue of monies due and payable in respect of various property loan
and instalment sale agreements which debt, it said, Zennies
were
unable to pay as and when they fell due.
[5]
The liquidation application became opposed and was eventually
postponed to the semi – urgent roll.
THE
BACKGROUND
[6]
On 30 January 2017 the sole member of Zennies signed a resolution to
place it under voluntary Business Rescue proceedings in
terms of
section 129(1)
of the
Companies Act. The
business rescue proceedings
of Zennies commenced on 1 February 2017. On 3 February 2017, Bernard
Schneider (“Schneider”)
was appointed as the business
rescue practitioner for Zennies.
[7]
On 14 February 2017 the application for judgment which was issued on
19 December 2016, was postponed to 16 May 2017 to allow
Mr Schneider
an opportunity of approximately three months to finalise the Business
Rescue Proceedings.
[8]
On 17 February 2017 the first creditors’ meeting for the
general body of creditors of Zennies took place in terms of section
151 of the Act.
There were two creditors present,
namely Business Partnersand the Bank. The minutes of the meeting
indicate that:
“
At the
next meeting, scheduled for 25 business days after the appointment of
the business rescue practitioner, a plan will be presented
and voted
on. This period for the voting of the plan can be extended with
the permission of the major creditors”.
[9]
The minute contains no recordal of any vote having taken place at the
meeting.
The proceedings at this first meeting are not in
dispute. On 9 March 2017 a Business Rescue Plan (“the
plan”)
was published by Mr Schneider.
[10]
On 23 March 2017 the second creditors’ meeting took place. It
is what happened at this meeting which is the nub of the
dispute.
[11]
According to the supplementary affidavit of Business Partners,
Schneider prepared and published the Plan which was distributed
on 9
March 2017. This plan would be tabled for discussion and voting at
the second creditors meeting which was scheduled for 23
March 2017.
On the 20 March 2017, Business Partners attorneys directed an email
to Mr Schneider which dealt with,
inter
alia,
the contents of the plan and
raised its concerns that the plan did not comply with the
requirements of section 150(2) of the Act.
The letter ended by
stating that they would advise their client to either raise a motion
in terms of section 152(d)(i) alternatively
(ii) of the Act “
in
terms of which you will be allowed to either amend the proposed plan
in accordance with the request by the holders of the creditors
voting
interest or adjourn the meeting in order to revise the plan for
further consideration.
” On the 22
March 2017, Mr Scheider replied by stating that it was his intention
of settling all of the creditors in full
and that he had already
addressed this by realizing certain assets. He believed that two to
three months would be the maximum duration
of this proposed plan.
[12]
According to Business Partners, the second meeting which took place
was adjourned in order to prepare and publish a revised
plan.
According to the Minutes of that meeting under the topic of ‘
Business
Rescue Plan’
, it was recorded,
inter alia
that the plan had been timeously circulated, that in order to comply
with the prescribed time frames, there were certain information
that
Mr Schneider had been unable to confirm at the time of compiling the
plan and that as such, it was suggested that the second
meeting and
the voting on the plan be adjourned until certain information and
facts were more firmly established. The Minutes also
recorded that
the ‘
period for the voting of the
plan can be extended with the permission of the major creditors
.’
[13]
In its affidavit, Business Partners relies on this recordal to claim
that in terms of section 153(3)(a)(ii) of the Act, Mr
Schneider was
required to prepare and publish a new or revised plan within ten
business days from the date of the second creditors’
meeting,
that period so it was stated, having lapsed on 6 April 2017 and
neither it nor the Bank had agreed to extend the time
period for him
to prepare and publish a new or revised plan. It therefore seeks a
declaratory order that the Business Rescue of
Zennies has ended
and/or lapsed in terms of section 132(2)(c)(i) of the Act.
[14]
Finally, with regard to the financial position of Zennies, the
Minutes recorded that Mr Schneider had received an offer of
R5.5
million for the company vehicles and that the proceeds would be
sufficient to settle the outstanding creditors. It was noted
that
Business partners and the Bank as the major creditors were present at
the meeting and that Mr Schneider “
advised
those present that he will amend and redistribute the Business plan
when he had more facts at his disposal, especially around
the pending
sale of assets and that Zennies Fresh Fruits CC would be able to
settle its overdue debt
.”
[15]
On 3 May 2017, the Bank brought a liquidation application against
Zennies. The founding affidavit addressed only the requirements
necessary to seek a winding up order, and did not deal with the
business rescue of Zennies, nor did it ask for the termination
of the
business rescue on the basis of what had purportedly transpired at
the second meeting. In its replying affidavit, the Bank
averred that
Zennies was no longer under Business Rescue, the contention being
that there was no agreement to extend the time periods
in reply to
the allegation that all parties present agreed to extend the time
periods in order to file an amended business rescue
plan. The effect
of this was that the plan was dismissed as contemplated by section
152 (3)(a) of the Act. It also denies that
Mr Schneider took any
steps in order to prepare and publish a new revised business plan
within 10 days as permitted by section
153(3)(a)(ii) as contemplated.
[16]
Zennies on the other hand contends that
as
a result of the lack of information available to Mr Schneider at the
Second Meeting and the creditors’ position at the
time, the
plan was not accepted, and the meeting was adjourned on the basis
that Mr Scheider would amend the plan and address the
concerns raised
by the creditors.
[17]
It argues that on Mr Schneider’s version, all of the parties
present at the Second Meeting agreed to extend the time
periods to
file an amended business rescue plan and that the Plan was neither
accepted nor rejected. The argument therefore
is that, “
a
further step
” had been taken in
the business rescue proceedings by the affected parties.
[18]
In summary, Zennies argument is that it remains under business rescue
and that, without the consent of Mr Schneider or the
leave of the
Court, the moratorium against any proceedings being instituted
against it remains in place.
[19]
The Plan was therefore not rejected, rather the parties agreed that
it be amended as contemplated in Section 152(1)(d)(ii)
and therefore
section 153 does not apply and even were it to be held that the Plan
was rejected
(
and that Section 153 does apply), in light of
the instruction that Mr Schneider had to amend the Plan, the business
rescue proceedings
did not terminate (as Section 153(1)(a)(i) would
apply.
THE
ISSUES TO BE CONSIDERED
[20]
The issue that needs to be considered in both matters therefore is
whether the business rescue proceedings have terminated
or come to an
end or whether it is still under business rescue. In order to answer
this question, I was requested to answer the
following subsidiary
questions:
20.1
Whether it was agreed to amend the plan as
contemplated in section 152(1)(d)(ii) without rejection of the plan;
20.2
Whether if the plan was rejected,a
further step was taken within the ambit of section 132(2)(a)(ii)
thereby preventing the
termination of the business rescue proceedings
and
20.3
Whether, if a further step within the
contemplation of section 132(2)(a)(ii) was taken, the business rescue
still automatically
terminates if the Business Rescue Practitioner
fails in any of his other statutory obligations.
THE
LEGISLATIVE FRAMEWORK
[21]
The crisp question is whether the fact that no vote was taken to
approve the plan at the second meeting justifies a conclusion
that
the plan was rejected as envisaged by section 152(3)(a) of the Act.
This section provides that if a proposed business rescue
plan is not
approved on a preliminary basis, as contemplated in subsection (2),
the plan is rejected, and may be considered further
only in terms of
section 153. It states as follows:
“
152
Consideration of business rescue plan
…
(3)
If a proposed business rescue plan –
(a)
is not approved on a preliminary basis, as contemplated in subsection
(2), the plan is rejected, and may be considered further
only in
terms of section 153…”
[22]
Business rescue proceedings are initiated either through a resolution
adopted by the board of the company in terms of section
129 (1)(a) or
(b). The Act furthermore provides the termination of Business Rescue
in certain instances. The first method of termination
is through an
application by an “
affected
person
”
to court in terms of section 130 (1)(a) for the setting aside of the
resolution on three grounds
[1]
.
Subsection (b) also makes provision that an affected person may also
apply to court to set aside the appointment of a practitioner
on the
grounds that the practitioner does not satisfy the requirements of
section 138, is not independent of the company or its
management or
lacks the necessary skills, having regard to the company’s
circumstances. An affected person is defined in
section 128(1)(a) of
the Act in relation to a company, as a shareholder or creditor of the
company, any registered trade union
representing employees of the
company and if any of the employees of the company are not
represented by a trade union, each of
those employees or their
respective representatives.
[23]
Business Rescue ends in terms of section 132 (2)(a)(i) of the Act
when the court sets aside the resolution or order that began
those
proceedings or has converted the proceedings to liquidation
proceedings in terms of section 132(2)(ii) of the Act.
[24]
Another manner in which Business Proceedings comes to an end is in
terms of section 132(2)(b) where the practitioner has filed
with the
Commissioner a notice of termination of business rescue proceedings.
It is common cause that this has not been done. Finally,
business
rescue proceedings also ends in terms of section 132(2)(c)(i) or (ii)
of the Act which provides for the termination of
business rescue when
a business rescue plan has been proposed and rejected in terms of
Part D and no affected person has acted
to extend the proceedings in
any manner contemplated in section 153.
[25]
In my view, this provision should be read in conjunction with section
152(3)(a) which reiterates that if a proposed business
rescue plan is
not approved on a preliminary basis, as contemplated in subsection
(2), the plan is rejected and may only be considered
further in terms
of section 153 of the Act.
[26]
Section 153 of the Act therefore only kicks in when a business rescue
plan has not been approved and subsequently rejected.
Section 153
provides for remedies in the event that a business rescue plan has
not been adopted. These include seeking a vote of
approval by the
practitioner from the holders of voting interests to prepare and
publish a revised plan or apply to court to set
aide the result of
the vote.
[27]
Section 153(3)(a)(i) and (ii) furthermore provides that if, on the
request of the practitioner in terms of subsection (1)(a)(i),
or a
call by an affected person in terms of subsection (1)(b)(i)(aa), the
meeting directs the practitioner to prepare and publish
a revised
business rescue plan –
“
(a)
the practitioner must ‘
(i)
conclude the meeting after that vote; and
(ii)
prepare and publish a new or revised business rescue plan within 10
business days;…”
[28]
In terms of section 153(5), if no person takes any action
contemplated in subsection (1), the practitioner “
must
promptly file a notice of the termination of the business rescue
proceedings
.”
[29]
It is common cause that the business rescue practitioner in both
applications has not filed a notice of termination of the
business
rescue proceedings. It is also interesting to note that despite the
apparent unhappiness in the manner in which the proceedings
were
undertaken, no application to remove the practitioner or set aside
his appointment was ever brought in terms of section 130(1)(b)(iii)
of the Act. Furthermore, none of the creditors sought to set aside
the Resolution in terms of section 130(1)(a)(ii) on the grounds
that
there is no reasonable prospect for rescuing the company.
[30]
At the meeting it is evident that the business plan was presented to
the creditors in terms of section 151 of the Act. It is
common cause
that the meeting was adjourned. On Zennies version, the meeting was
adjourned in order for Mr Schneider to obtain
more information. This
requires a closer analysis of section 152 of the Act which provides
for the consideration of a business
rescue plan. This section
provides,
inter alia
as follows:
“
152.
Consideration of business rescue plan
(1) At a meeting
convened in terms of section 151, the practitioner must-
(a) introduce the
proposed business plan for consideration by the creditors and, if
applicable, by the shareholders;
(b) inform the meeting
whether the practitioner continues to believe that there is a
reasonable prospect of the company being rescued;
(c) provide an
opportunity for the employees‟ representatives to address the
meeting;
(d) invite discussion,
and entertain and conduct a vote, on any motions to-
(i) amend the
proposed plan, in any manner moved and seconded by holders of
creditors‟ voting interests, and satisfactory
to the
practitioner; or
(ii)
direct the practitioner to adjourn the meeting in order to
revise the plan for further consideration; and
(e)
call for a vote for preliminary approval of the proposed plan, as
amended if applicable, unless the meeting has first been adjourned
in
accordance with paragraph (d)(ii). ”
[31]
It is apparent from the wording of subsection 152(1)(d)(ii) that it
has
to be
read in conjunction with section 152(1)(e) by the inclusion of the
word ‘
and’
at
the end of the sentence. This means that in the event that a
practitioner is directed to adjourn the meeting in order to
revise
the plan for further consideration, one of two things can occur in
terms of subsection (e). First, the practitioner
would have to
call for a vote for preliminary approval of the proposed plan, as
amended if applicable
unless
(my emphasis) the meeting has first been adjourned in accordance with
paragraphs (d)(ii).
[32]
The Respondent argued that there was no evidence that a vote had been
taken. This contention would be correct if the meeting
was postponed
in order for the practitioner to obtain further information that he
required for the amended business plan.
[33]
Both Applicants placed reliance on section 152 (3)(a) of the Act on
the proposition that because the business rescue plan was
not
approved on a preliminary basis as envisaged in section 152(1)(e) and
152(1)(d)(ii) of the Act, that it was automatically rejected.
This
argument presupposes that there was a vote on a preliminary basis of
the business rescue plan as contemplated in subsection
2. There is no
evidence to suggest that this happened and accordingly I find that
the both the Applicants reliance on section 152
(3)(a) and
132(2)(c)(1) is misplaced. Since I have found that there is no
evidence to suggest that the business rescue plan was
not approved,
there is no need for me to deal with section 153 as it does not find
application here.
[34]
To my mind, however, this is not the end of the inquiry. Can it be
that a company enjoys the protection of business rescue
indefinitely
to the detriment of its creditors? Although the Act does not directly
specify the length a company can be under business
rescue, section
132(3) provides a guide under which the legislature envisaged
companies to remain under business rescue. This section
provides that
if a company’s business rescue proceedings have not ended
within three months after the start of those proceedings,
or such
longer time as the court, on application by the practitioner may
allow, the practitioner must prepare a progress report
of the
business rescue proceedings and update it at the end of each
subsequent month and deliver it to each affected person until
the end
of the proceedings. No such application was brought by Mr
Schneider to extend the business rescue.
Purpose
of Business Rescue
[35]
“Business rescue” is defined in Section 128(b) of the Act
to mean “proceedings to facilitate the rehabilitation
of a
company that is financially distressed by providing for-
i) the temporary
supervision of the company, and of the management of its affairs,
business and property;
ii) the
temporary moratorium on the rights of claimants against the company
or in respect of property in its possession; and
iii) the
development and implementation, if approved, of a plan to rescue the
company by restructuring its affairs, business, property,
debt and
other liabilities, and equity in a manner that maximises the
likelihood of the company continuing in existence on a solvent
basis
or, if it is not possible for the company to so continue in
existence, results in a better return for the company’s
creditors or shareholders than would result from the immediate
liquidation of the company.”
[36]
In
Advanced
Technologies and Engineering Company (Pty) Ltd (in Business Rescue) v
Aeronautique
et
Technologies
Embarquees Sas and Others
(GNP)
Case No 72522/2011
[2]
,
judgment delivered on 6 June 2012, Fabricius J was asked to consider
an application for the extension of the time limits stated
in ss
129(3) and (4) after these had expired. He was of the view that
it was clear from the relevant sections contained in
Chapter 6 that a
substantial degree of urgency is envisaged once a company has decided
to adopt the relevant resolution beginning
business rescue
proceedings.
[37]
With regard to argument that the sole purpose of the business rescue
is to avoid liquidation proceedings the following was
said in the
matter of
Absa Bank Limited v Caine NO and Another;
in re Absa
Bank Limited v Caine N.O. and Another (38123/2013; 3915/2013)
[2014] ZAFSHC 46
(2 APRIL 2014) where it was stated as follows at
para 40:
“
Business
rescue proceedings are much more flexible and financially distressed
company friendly than judicial management. The
potential
business rescue plan provided for in ss 128(1)(b)(iii)
has
two objects in mind
,
the primary object being to facilitate the continued existence of the
company in a state of solvency and secondly and in
the alternative,
in the event that the primary objective cannot be achieved or appears
not to be viable,
to
facilitate a better return for the creditors or shareholders of the
company than would result from immediate liquidation
.
Consequently the Supreme Court of Appeal found in
Oakdene
Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami)
(Pty) Ltd and Others
2013
(4) SA 539
(SCA)
at para [26] as follows:
“
It
follows, as I see it, that the achievement of any one of the two
goals referred to in section 128(1)(b) would qualify as "business
rescue" in terms of section 131(4).”
As
further stated by the Supreme Court of Appeal in para [27]:
“…
business
rescue proceedings are not limited to the return of the company to
solvency…”
[38]
While the sentiments expressed are noble, it cannot lead to a
situation that where an extraordinary amount of time is taken
to
achieve this result, this should be at the expense of the rights of
creditors. The balancing of these rights should always
be
paramount in the ambit of fairness.
[39]
In
Commissioner,
South African Revenue Service v Beginsel NO and Others
2013 (1) SA 307
(WCC), where the Commissioner challenged the validity
of a decision taken at a meeting of creditors to adopt a business
plan and
sought a conversion of the business rescue into winding-up
proceedings, the court found that the implementation of the business
plan was far advanced - there was already planning for the sale
of some of the respondent’s operations and the business
rescue
plan was supported by 87% of the value of creditors present at the
meeting of creditors whilst only SARS took an opposite
view.
Consequently the court found that nothing would be achieved if the
business rescue proceedings would be converted into
liquidation,
bearing in mind the extra costs to be incurred. The court was
also satisfied that the continuation of the business
rescue
proceedings would result in a better return for the company’s
creditors as a whole than would result from the reintroduction
of the
liquidation process.
[3]
[40]
This, however, is not the case in this instance. From the minutes of
the second meeting, it is apparent that what Mr Schneider
envisages
for Zennies is an informal liquidation process, by selling the assets
of Zennies in order to settle its indebtedness
in full to the Bank
and Business Partners. This matter is distinguishable from the
Beginsel
matter as the majority of the creditors in
casu
were not satisfied with the initial plan – hence the call for
additional information and there seems no indication that Mr
Schneider obtained the additional information that he required in
order to finalise an amended plan.
[41]
In
Oakdene Square Properties
,
supra
, the
court, remarked as follows in para [33]:
“
My
problem with the proposal that the business rescue practitioner,
rather than the liquidator, should sell the property as a whole,
is
that it offers no more than an alternative, informal kind of
winding-up of the company, outside the liquidation provisions of
the
1973
Companies Act which
had, incidentally, been preserved, for the
time being, by item 9 of sch 5 of the 2008 Act. I do not
believe, however, that
this could have been the intention of creating
business rescue as an institution…….
A
fortiori
, I do not
believe that business rescue was intended to achieve a winding-up of
a company to avoid the consequences of liquidation
proceedings, which
is what the appellants apparently seek to achieve.”
[42]
In the absence of specific information received to finalize an
amended plan for consideration, a Business Rescue Practitioner
is
under a statutory duty to file a Notice of Termination. There
has been an extraordinary long period of time since the
Business
Rescue Proceedings were initiated. The second meeting of creditors
occurred on 23 March 2017 and according to the affidavit
of Mr
Schneider, the reason for the adjournment was for him to obtain
information,
inter
alia
regarding the sale of certain assets of Zennies and these included
the sale of certain trucks, properties and the raising of working
capital. There was also an averment that he had entered into an
Agreement in principle and was awaiting signature of the
signed sale
agreement which would ostensibly have been finalized on 20 May 2017.
Notably absent from the opposing affidavit, which
was commissioned on
29 May 2017 was any evidence that the sale agreement had in fact been
concluded. Neither was any evidence produced
regarding the purported
sale of the trucks which would have been sold in the region of
R4million. In the absence of this vital
information, this court was
therefore unable to ascertain how far Mr Scheider was in securing
these agreements. I mention these
considerations in passing as it
would in any event not have assisted Zennies since this was not part
of the implementation of a
plan as was consideration in
Beginsel
.
[43]
In my view, the mechanisms of Business Rescue proceedings were not
designed to protect a company indefinitely to the detriment
of the
rights of its creditors. The delay in the finalization of the
business rescue proceedings are unreasonable in the circumstances
and
I am satisfied that an order is justified terminating the
proceedings.
[44]
In case number 24618/2016, Business Partners in addition to seeking
judgment against Zennies, is also pursuing judgment against
the
Second Respondent in his personal capacity by virtue of the
suretyship agreement in respect of the immovable property described
as Erf 1319 Durbanville. There is no indication that this property is
the primary residence of the Second Respondent especially
given the
indication that this property would have been be sold in order to
raise working capital for Zennies. As an aside, in
New
Port Finance Company (Pty) Ltd and Another v Nedbank
Ltd
[2014]
ZASCA 201
;
[2015]
2 All SA 1
(SCA)
paras 9, 10 and 12 the Supreme Court of Appeal considered the effect
of business rescue on obligations of sureties and pronounced
as
follows:
‘
But
we were referred to no authority and I have discovered none, in which
it has been held that a compromise of the principal debtor's
liability under the judgment, whether as a result of business rescue
or otherwise, would accrue
to
the advantage of the surety
after judgment had been taken against them. Therecan be no question of the surety's rights or
interests being prejudiced thereby,
[
Bock
and others v Duburoro Investments (Pty) Ltd
2004
(2) SA 242
(SCA)
paras 18 – 21] because the extent of the surety's liability for
the debt in question has
been fixed and determined. How the creditor thereafter sets about executing the
judgment against the principal debtor does not affect
either the nature or the extent of the surety's liability
…
.
Any default on the part of the principal debtor entitled the bank to
sue the sureties. The benefit of excussion was waived
…
.
the fact that in any of those situations the principal debtor would
be released in whole or in part from its obligations would
not
disentitle the bank from recovering the outstanding amount from the
sureties.’
[45]
I am therefore satisfied, that even if I am wrong with regard to my
assessment of the Business Rescue proceedings, that Business
partners
is entitled to judgment against Schroeder in the absence of any
answering affidavit in the application for judgment. I
will however
not order the executability of Erf 1319 Durbanville as I do not have
sufficient information before me to make such
an order at this stage.
I will also not order the executability of the listed properties
given the order that I propose to make
in case number 7681/2016.
I conclude therefore that a proper case has been made out for the
relief sought in both notice
of motions adjusted as indicated in the
orders below.
In
the circumstances, the following orders are made:
Application
24618/2016
:
1.
It is declared that the Business Rescue
proceedings of First Respondent has terminated.
2.
Judgment is granted against first and
second respondents jointly and severally, the one paying, the other
to be absolved, for:
2.1
Payment in the amount of R 19 151.04 for
arrear Royalties in respect of the Royalty Agreement with account
number 702009;
2.2
Payment in the amount of R 7 693.26 for
future Royalties in respect of the Royalty Agreement with account
number 702009;
2.3
Payment in the amount of R 666 749.28 in
respect of the Loan Agreement with account number 405756;
2.4
Payment in the amount of R 2 046 179.68 in
respect of the Loan Agreement with account number 405757;
2.5.
Interest on the amounts referred to in
paragraphs 2.1 and 2.2 above at a rate of Prime plus 0% (Prime
currently 10.50%) compounded
monthly in arrears from 26 November 2016
until date of final payment, both days inclusive.
2.6.
Interest in the amount referred to in
paragraphs 2.3 and 2.4 above at a rate of Prime plus 4.00% (Prime
currently 10.50%) compounded
monthly in arrears from 26 November 2016
until date of final payment, both days inclusive.
3.
Costs to be paid on a party and party
scale.
In
matter 7681/17: Liquidation application
1.
It is declared that the Business Rescue
proceedings of Respondent has terminated.
2.
The estate of Respondent is placed under
provisional liquidation in the hands of the Master of the High Court.
3.
A
rule nisi
is issued calling upon all interested parties to furnish reasons, if
any, to this court on Tuesday 27 February 2018 why a final
winding-up
order should not be issued against Respondent.
4.
This order is to be served by the Sheriff
of his or her duly authorized deputy at its registered office and
principal place of business
being 11 Watercress Lane, Zeekoevlei,
7941.
5.
A copy of the order must be served on:
(i)
Any registered trade union that, as far as
the sheriff can reasonably ascertain, represents any of the employees
of Respondent;
(ii)
The Respondent’s employees if any, by
affixing a copy of the order to any notice board to which the
employees have access
inside the Respondent’s premises,
alternatively by affixing a copy thereof to the front gate, where
applicable, failing which
the front door of the premises from which
the Respondent conducts any business at 11 Watercress Lane,
Zeekoevlei, 7941.
6.
This order should be served upon the South
African Revenue Services.
7.
This order is to be published without any
delay in The Burger and the Cape Times.
8.
The costs of this application, including
the costs of the 14 September 2017 but excluding the costs of
opposition of this application,
shall be costs in the liquidation.
_____________________________
KUSEVITSKY AJ
[1]
“
Sec
130 - Objections to company resolution
(1)
Subject to subsection (2), at any time after the adoption of a
resolution in terms of section 129, until the adoption of a
business
rescue plan in terms of section 152, an affected person may apply to
a court for an order-
1.
(a) setting aside the resolution, on
the grounds that-
1.
(i) there is no reasonable basis for
believing that the company is financially distressed;
2.
(ii) there is no reasonable prospect
for rescuing the company; or
3.
(iii) the company has failed to
satisfy the procedural requirements set out
in
section 129”
[2]
At
para 27
[3]
See para 40
of Absa v Caine NO supra