About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2019
>>
[2019] ZAGPPHC 131
|
|
Slippers v Ingogo Wildlife Studio and Taxidermy CC and Others (83412/17, 83413/17, 83414/17) [2019] ZAGPPHC 131 (26 April 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
Number: 83412/17
In
the matter between:
JAN
WALTER SLIPPERS
Applicant
and
INGOGO
WILDLIFE STUDIO AND
First
Respondent
TAXIDERMY CC AND
ANOTHER
THE
STANDARD BANK OF SOUTH AFRICA
Intervening
Creditor
LIMITED
Case number:
83413/17
In
the matter between:
JAN
WALTER SLIPPERS
Applicant
and
INGOGO
WILDSPLAAS CC
Respondent
THE STANDARD BANK OF
SOUTH AFRICA
LIMITED
Intervening
Creditor
Case number:
83414/17
In
the matter between:
JAN
WALTER SLIPPERS
Applicant
and
INGOGO
SAFARIS CC
Respondent
THE STANDARD BANK OF
SOUTH AFRICA
LIMITED
Intervening
Creditor
JUDGMENT
POTTERILL
J
[1]
The applicant, Mr. Slippers (“Slippers”) is applying
under case numbers 83412/17, 83413/17
and 83414/17 for respectively
Ingogo Wildlife Studio and Taxidermy CC, Ingogo Wildsplaas CC and
Ingogo Safaris CC (collectively
herein referred to as the CC’s),
to be placed under supervision in terms of business rescue
proceedings as provided for in
Chapter 6 of the Companies Act 71 of
2008 (“the Companies Act”) read with
section 66(1)(A)
of
the
Close Corporations Act 69 of 1984
. Further ancillary relief
is also sought.
[2]
The respondent, The Standard Bank of South Africa Limited (“the
Standard Bank”) in all three
matters is an intervening creditor
and an affected person as envisioned in terms of section 129(1) of
the Companies Act.
Background as set out
in the common cause facts
[3]
In the High Court of South Africa, Limpopo Division, Polokwane, there
are pending liquidation proceedings
against the three CC’s
herein as well as sequestration proceedings against Slippers and the
trustees of the Walter Slippers
Family Trust. These proceedings
were postponed and on the next hearing date the applications for
business rescue were served
shortly before argument on liquidation
and sequestration proceedings were to commence. The liquidation
and sequestration
proceedings were postponed for finalisation of
these proceedings. Standard Bank has begrudgingly conceded to
the jurisdiction
of this court despite the pending liquidations in
the Limpopo Division, Polokwane, in order to avoid further
postponements.
The applications were not filed in the Limpopo
Division, but filed in this Division apparently due to Slippers
moving to the Western
Cape and the address of his business partner
clothes this court with jurisdiction.
[4]
Slippers is the sole member of the three CC’s. Slippers
is a trustee of the Trust.
Slippers, the Trust and the CC’s
all are indebted to Standard Bank as co-principal debtors and/or
sureties. Slippers
manages and controls the business conducted
as a restaurant and nursery, a water bottling plant, a crocodile
breeding farm, a lion
breeding farm, a hunting enterprise, a
taxidermy studio and a property holding.
[5]
Slippers is indebted to Standard Bank in excess of R12 million.
The CC’s were unable to
pay their creditors, their claims
during the past 18 months. The CC’s are not commercially
solvent.
The CC’s are
financially distressed
[6]
Grounds set out for these applications are that the CC’s are
financially distressed. The
CC’s had failed to pay over
amounts due and payable to Standard Bank. There is no prospect
that the CC’s will
be able to pay all its debts as it become
due and payable within the immediately ensuing six months.
[1]
Although the CC’s appear to be factually solvent i.e. that the
value of its assets, at face value, exceeds its debts,
the CC’s
are unable to satisfy the debt due and payable to Standard Bank.
It is thus commercially insolvent for liquidation
purposes and
financially distressed within the contemplation of section
131(4)(a)(i) of the Companies Act.
[7]
The reason for the CC’s present state of affairs is that
Slippers on 16 November 2015 suffered
a stroke that left him unable
to function. Slippers was unable to attend to the business of
the CC’s until the winter
of 2016. The business of the
CC’s suffered because they were without his hands on approach.
Since his return
to the businesses the income generated is reflected
as an upward trend. It is however common cause that the CC’s
are
commercially insolvent and cannot pay Standard Bank the debt due
and payable.
[8]
The business rescue applications are premised on the fact that the
business activity of the CC’s,
the Trust and Slippers
personally cannot exist independently of each other and that the
commercial failure and insolvency of one
entity impacts materially on
the others. To repay Standard Bank Slippers has attempted to
sell the CC’s and its related
entities because that would
constitute the most efficient way to generate the amount required to
settle the Standard Bank claim.
To this end Slippers has
attempted to sell the business activities as a unit. Slippers
has however been unsuccessful in doing
same.
[9]
Slippers has now embarked on a programme to sell certain components
and assets of the business activities
in an attempt to pay Standard
Bank. Slippers has attempted to sell the land owned by the
Trust to the Municipality of Blouberg.
This did not transpire.
He was to receive an amount of R4.2 million from the sales of shares
which amount he would have paid
to Standard Bank during December 2017
to January 2018. This has not transpired.
[10] It is
averred that a business rescue practitioner will be able to devise a
detailed plan. This will not only
benefit the CC’s and
the Bank, but also will secure the 20 employees’ income working
for these entities. The
loss of the employees of their income
renders the applications to be granted just and equitable.
Are
there reasonable prospects that the CC’s can be rehabilitated
to solvency?
[11]
This court must exercise its discretion on whether there is a
reasonable prospect for rescuing the company,
it either can
reasonably be rescued or it can’t; thus a value
judgment.
[2]
[12]
Section 128(1)(b) provides as follows:
“’
Business
rescue’ means 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)
a 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;”
Section
128(1)(b) thus requires that business rescue must facilitate a
rehabilitation. Rehabilitation has one of two goals;
one
to return the company to solvency or to provide a better deal for
creditors and shareholders that what they would have received
through
liquidation.
[3]
[13]
The prospects of a rehabilitation must be reasonable. A mere
speculation or arguable possibility is
not sufficient; there
must be a reasonable prospect based on reasonable grounds.
[14] In
this matter there is no ground or facts set out as to why this
application would provide a better deal
for creditors and
shareholders than what they would receive through liquidation.
The Court accepts that business rescue would
not provide a better
deal for Standard Bank than it would receive through liquidation.
This application thus hinges only
on the business rescue plan to
return the CC’s to solvency.
[15] On
Slipper’s version the commercial insolvency of the CC’s
is due to the fact that he had a hands
on approach on the businesses
until the awful fate of a stroke. Yet, he now lives in the
Western Cape. There is no
explanation as to how, him still not
having a hands on approach, will bring the business back to
solvency. The application
is completely silent as to what has
caused the CC’s to generate more income, but still wholly
insufficient income to pay
the debt due and payable to Standard Bank
and how this income could be boosted. There is not a single
fact set out on which
a practitioner could devise a plan to
rehabilitate the CC’s. The only factual evidence to
rehabilitate the CC’s
is the selling of the businesses and/or
the assets of the CC’s. This has however not transpired,
despite numerous attempts,
until the day of the hearing i.e. now
middle April 2019. There are no facts set out as to why the
selling by a business rescue
practitioner would derive greater
proceeds in favour of the creditors as opposed to liquidation and
sequestration of the relevant
CC’s and entities. The
submission by Standard Bank that the business rescue applications are
just a play for time to
derail the pending liquidation and
sequestration applications, under these circumstances, is a valid
argument.
[16] These
applications are
per excellence
examples as to how
applications for business rescue should not be put before court.
The applications lack any urgency, method,
facts or sincere intention
reflected in a plan to rehabilitate the CC’s; the
applications’ intentions are just
to delay the inevitable.
Slippers did not establish grounds for the reasonable prospects of
achieving the rehabilitation
of the CC’s to solvency.
Can
the applications be granted because it would be just and equitable
for financial
reasons?
[17] I
cannot find it otherwise just and equitable to grant the business
rescue application for financial reasons
and there is simply no
prospects for rehabilitation of the companies. In our economy
it is always sad when jobs are lost
and business rescue has as one of
its aims to prevent such loss, but these jobs cannot be saved for
financial reasons because there
is simply no reasonable prospect for
rehabilitation of the CC’s.
[18] In
summary thus, I am unconvinced that there is any reasonable prospect
of the CC’s being rehabilitated
to solvency or that there is a
reasonable prospect that it would be just and equitable to do so for
financial reasons.
[19] In the
circumstances the applications for business rescue must fail and a
provisional winding-up order must follow
as necessary.
[4]
[20] I
accordingly mark the draft orders as “X1”, “X2”
and “X3” and they are made
an order of court.
S.
POTTERILL
JUDGE
OF THE HIGH COURT
CASE NO: 83412/17,
83413/17 and 83414/17
HEARD
ON: 17 April 2019
FOR
THE APPLICANT: ADV. F.W. BOTES SC
INSTRUCTED
BY: Machobane Kriel Inc.
FOR
THE INTERVENING CREDITOR: ADV. B.H. SWART SC
ADV. J.P. VAN DEN BERG
INSTRUCTED
BY: Adams & Adams
DATE
OF JUDGMENT: 26 April 2019
[1]
Section 128(1)(f)(i) of the Companies Act
[2]
Oakdene Square Properties v Farm Bothasfontein
[2013] 3 All
SA 303
(SCA) par [21]
[3]
Oakdene supra
par [26]
[4]
Section 131(1)(b);
Essa v Bestvest
2012 (5) SA 497
(WCC)