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[2013] ZAKZDHC 45
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Finance Factors CC v Jayesem (Pty) Ltd and Others (5304/2013) [2013] ZAKZDHC 45 (22 August 2013)
IN THE HIGH COURT OF
SOUTH AFRICA
KWA ZULU-NATAL, DURBAN
CASE NO.:5304/2013
In
the matter between:
FINANCE
FACTORS CC
...................................................................................
Applicant
v
JAYESEM
(PTY) LTD
............................................................................
First
Respondent
THE
COMPANIES AND INTELLECTUAL
PROPERTY
COMMISSION
.............................................................
Second
Respondent
TREVOR K MORRIS N.O.
...................................................................
Third
Respondent
J U D G M E N T
KOEN
J
INTRODUCTION:
[1] The applicant claims
the following relief:
‘
1.
That the resolution of
the first respondent in terms of
Section 129
of the
Companies Act,
No. 71 of 2008
1
passed on 6 May 2013 that
the first respondent voluntarily begin business rescue proceedings be
and is hereby set aside.
2.
That the first respondent
pays the costs of this application.
3.
Alternative relief’.
[2] In opposition to the
claim, a preliminary answering affidavit by Mr Ranjith Ramnarain, the
sole director of the first respondent,
was filed.
[3] An affidavit by the
business rescue practitioner
2
appointed pursuant to the
resolution was also filed. He proposes a business rescue plan, a copy
whereof is annexed to his affidavit.
[4] In reply, the
applicant filed an affidavit which records that the contents thereof
is also to be considered ‘for the purpose
of establishing the
basis why the first respondent should be placed in liquidation in
terms of
s 130
(5) of the Act’. In the applicant’s heads
of argument notice is given that in the event of an order being
granted as
sought in the original notice of motion, that an order
will also be sought that the first respondent be placed in final
liquidation
as contemplated in
section 130
(5) (c) (i) of the Act.
BACKGROUND:
[5] The resolution sought
to be set aside, was passed on the 6 May 2013 by the board of the
first respondent, represented by its
sole director Mr Ramnarain. This
resolution was passed shortly before the hearing of oral evidence in
the application under case
no. 12900/2011 between the applicant and
first respondent which was to have commenced on the 20 May 2013. In
that application the
applicant claims judgment against the first
respondent as surety for the indebtedness of Ramnarain Holdings (Pty)
Ltd to it, for
payment of the sum of R12 000 000, interest
thereon
a
tempore morae
at
the rate of 15,5% per annum from date of judgment to date of payment,
the costs of the application, and an order that the immovable
properties described as Erf 2181 Durban North, Registration Division
FU, Province of KwaZulu–Natal in extent 3944 square
metres and
Erf 1710 Durban North, Registration Division FU, Province of
KwaZulu-Natal in extent 4818 square metres be declared
executable.
[6] The notice of the
resolution was duly filed with the second respondent, the Companies
and Intellectual Property Commission on
8 May 2013.
[7] The sworn statement
of the facts relevant to the grounds on which the board resolution
was founded, as required by
s 129
(3) (a) of the Act, forms part of
the papers. In summarized terms, it provides that:
(a) The sole director of
the first respondent reasonably believes that the first respondent is
financially distressed due to the
fact that it is reasonably unlikely
that it will be able to pay off all its debts as they fall due and
payable within the immediately
ensuing 6 months;
(b) It is not insolvent
because the value of its assets exceed that of its liabilities;
(c) It has an admitted
debt of approximately R12 000 000, the major portion of
which is secured by means of an immovable
property owned by it;
(d) It employs
‘approximately’ two people;
(e) It came into
difficulty when a secured creditor sought to declare the only asset
owned by it executable for the debts of a liquidated
entity Ramnarain
Holdings (Pty) Ltd. Despite attempts at settling the mortgage bond
amount the creditor persists with litigation
thus creating undue
financial distress for the first respondent and its affected parties;
(f) The first respondent,
if given the opportunity under the supervision of a business rescue
practitioner, will most likely be
able to settle the full extent of
its creditors. In order to achieve this, it is crucial for it to be
allowed to trade unhindered
in the ordinary course of business,
pursuant to the provisions of chapter 6 of the Company’s Act. A
sale of the immovable
property may settle all debts;
(g) The first
respondent’s nature of business and principal activities
incorporate the investment in immovable property;
(h) If management, in
conjunction with the appointed business rescue practitioner, is
afforded a fair opportunity and reasonable
prospect to restructure it
affairs, business debt and other liabilities and implements such
plans, the director is of the opinion
that the first respondent has
reasonable prospects of success and therefore it can be rescued.
[8] The properties owned
by the first respondent referred to above and sought to be declared
executable are the only immovable properties
owned by it and comprise
an extensive and substantial residential dwelling occupied by the
sole director of the first respondent
3
.
[9] Due notice of the
present application has been given to the first respondent and the
second respondent as required in terms
of
s 130
(3) (a) of the Act.
[10] It also emerged only
from the proposed business rescue plan that the known creditors of
the first respondent are:
(a) The applicant in
respect of a secured indebtedness of R12 000 000 secured by
a bond (the balance of the applicant’s
claim to make up
R51 725 682,52 is concurrent and remains disputed by the
first respondent);
(b) K Maharaj Attorneys
Incorporated, attorneys of the first respondent, for a concurrent
claim of R260 000;
(c) One D Singh, of whom
no further details are provided, for a concurrent claim of R210 000;
(d) R Ramnarain
4
for a concurrent claim of
R4 500 000.
These creditors are all
‘affected persons’ as contemplated in
s 128
(1) (a) (i)
of the Act. No details are provided in the papers as to the identity
of the shareholder of the first respondent. There
is also no
reference to any registered trade union representing any employees of
the first respondent. In an annexure to the preliminary
affidavit by
the sole director, six employees namely two security guards, a maid,
housekeeper, secretary and accounts person are
identified. Notice to
these persons was given informally by a notice being delivered to Mr
R Ramnarain at the address of the properties.
The provisions of
s 130
(3) (b) relating to the notification to each affected person of the
application accordingly also appear to have been complied with.
The
first respondent accepted that this was so and did not place the
question of service and notification of the application in
dispute.
[11] Whatever disputes
there may be in earlier litigation, it is common cause on the papers
before me that the applicant is a secured
creditor of the first
respondent for an amount of R12 000 000 secured by a surety
mortgage bond registered against the
properties. The applicant is
therefore clearly an affected person as contemplated in the Act.
LEGISLATIVE FRAMEWORK:
[12] In terms of
s 130
(1) (a) of the Act an affected person may apply to a court for an
order setting aside a resolution in terms of
s 129
resolving that the
first respondent voluntarily begin business rescue proceedings and
placing it under supervision on the grounds:
‘
(i)
There is no reasonable basis for believing that the company is
financially distressed;
(ii) There is no
reasonable prospect for rescuing the company; or
(iii) The company has
failed to satisfy the procedural requirements set out in
section
129
’.
[13] In terms of
s 130
(5) of the Act:
‘
When
considering an application in terms of subsection (1) (a) to set
aside the company’s resolution, the court may –
set aside the
resolution-
on any grounds set out
in subsection (1); or
if, having regard to all
of the evidence, the court considers that it is otherwise just and
equitable to do so;
(b) ….
5
(c) if it makes an order
under paragraph (a) or (b) setting aside the company’s
resolution, may make any further necessary
and appropriate order,
including-
(i) an order placing the
company under liquidation; or
(ii) if the court has
found that there were no reasonable grounds for believing that the
company would be unlikely to pay all of
its debts as they became due
and payable, an order of costs against any director who voted in
favour of the resolution to commence
business rescue proceedings,
unless the court is satisfied that the director acted in good faith
and on the basis of information
that the director was entitled to
rely upon in terms of
section 76
(4) and (5)’.
6
[14]
Prima
facie
on
the papers, the first respondent complied with the procedural
requirements set out in
s 129.
The case made out by the applicant in
any event did not rely on the grounds contained in
s 130
(1) (a)
(iii) as a basis or ground for setting aside the resolution.
[15] On the papers the
application was based on sub paragraphs (i) and (ii) of
s 130
(1)(a)
of the Act. In argument before me, Mr Hollis SC on behalf of the
applicant however accepted that the resolution could not
be set aside
on the grounds that there is no reasonable basis for believing that
the first respondent is financially distressed.
In terms of
s128(1)(f)
, the term ‘financially distressed’ refers to a
particular company at any particular time appearing ‘reasonably
unlikely… to pay all of its debts as they become due and
payable within the immediately ensuing six months; or …
(it
appearing) to be reasonably likely that the company will become
insolvent within the immediately ensuing six months’.
On the
first respondent’s version it is commercially insolvent and
unable to pay all of its debts as they become due and
payable.
[16] The sole ground
persisted with by the applicant was that contained in
s 130
(1) (a)
(ii) namely that ‘there is no reasonable prospect for rescuing
the company’.
DISCUSSION:
[17] Mr King SC, on
behalf of the first respondent, has stressed that business rescue
proceedings can either be commenced voluntarily
by the board of a
company in terms of
s 129
or pursuant to a court order in terms
of
s 131
of the Act. In regard to the latter he submitted that the
requirement in
s131(4)(a)(iii)
that the court must be satisfied that
there is ‘a reasonable prospect for rescuing the company’
had to be distinguished
from the requirement in
s129
(1) (b) that the
‘board has reasonable grounds to believe that … there
appears to be a reasonable prospect of rescuing
the company’.
In my view nothing material, with respect, turns on this distinction
in the context of the present case..
[18] A more important
consideration is the similarity between
s 130
(1) (a) (ii) requiring
an affected person applying to court to set aside a resolution to
advance grounds that ‘that there
is no reasonable prospect for
rescuing the company’ and that in
s 131
(4) sub paragraph (a)
(iii) which requires that a court granting such an order be satisfied
that ‘it is otherwise just and
equitable to do so for financial
reasons, and there is a reasonable prospect for rescuing the
company…’. In both instances
the court must be satisfied
as to whether there is a reasonable prospect of
7
rescuing the company. The
requirement in
s 130
(1) (a) (ii) is just a mirror image of that
contained in
s 131
(4) (a) (iii). The case law relating to the latter
would be of equal application, or certainly of considerable
persuasive value
in considering the negative requirement that an
affected person has to show in an application to set aside a
resolution, that there
is ‘no reasonable prospect for rescuing
the company’. The only difference is that in respect of an
application to set
aside a resolution, although it might involve a
negative, the onus would be on the applicant, seeking the setting
aside of the
resolution to begin business rescue proceedings, to
prove on a balance of probabilities that ‘that there is no
reasonable
prospect for rescuing the company’, whereas in an
application pursuant to
s 131
, the applicant for an order that a
company be placed under business rescue proceedings has the onus to
show that there is a reasonable
prospect for rescuing the company.
[19] Judicial
pronouncements on what is meant by ‘reasonable prospect for
rescuing the company’ in the context of
s 131
, as in
Oakdene
Square Properties (Pty) Ltd. v Farm Bothasfontein (Kyalami) (Pty)
Ltd.
8
are
of equal application to the present application.
[20] At the outset, it is
important to note that the definition of ‘business rescue’
in
s 128
(1)(b)
9
of the Act contemplates
not only a primary goal namely the continued existence of the
company, but also a secondary goal namely
to facilitate a better
return for the creditors or shareholders of a company than would
result from immediate liquidation
10
.
The parties were
ad
idem
that
at best for the first respondent any reasonable prospect for rescuing
it would have to be found in respect of the secondary
goal as there
is no likelihood of it continuing on a solvent basis
11
.
Business rescue must be understood in the context of these special
meanings given to the words ‘business rescue’ and
not in
the ordinary meaning one might wish to assign to the word
‘rescuing’
12
.
[21] The pertinent
question therefore becomes whether the applicant has established
grounds demonstrating that there is no reasonable
prospect for
rescuing the company on the facts of the case. That enquiry requires
demonstrating that there is no reasonable prospect
based on
reasonable grounds that it could be rescued i.e. that it would result
in a better return for the first respondent’s
creditors or
shareholders than would result from the immediate liquidation of the
first respondent.
[22] In deciding that
issue, it is not for the applicant to negative every conceivable plan
or scheme which could be devised if
a preliminary business plan was
to be submitted to creditors and allowed to be developed by any
amendments or refinements thereof.
As was remarked in the
Oakdene
case
13
,
‘the development of a plan cannot be a goal in itself. It can
only be the means to an end’. As much as an affected
person in
an application in terms of
s 131
might not be required to set out a
detailed plan, this being left to the business rescue practitioner
after proper investigation
in terms of
s 141
, where a business rescue
practitioner has been appointed and proposed a plan, it will be
sufficient for the applicant to show that
the terms of such plan,
being the basis advanced for ‘rescuing the company’ has
no reasonable prospect of doing so.
The answer to the question as to
whether there are no reasonable prospects for rescuing a company can
only be based on the basis
advanced for contending that there are
such grounds, objectively viewed and evaluated, demonstrating ‘no
reasonable grounds’.
Answering that question does not involve
the exercise of a discretion in the strict sense, but the exercise of
a value judgment
14
.
[23] The proposal
advanced by the business rescue practitioner includes the following:
(a) That a moratorium be
exercised for a further three months’ until 31 August 2013 with
‘ring fenced debt’ being
reduced by payment of the sum of
R20 000 per month commencing from the 31 August 2013 in the
statutory order of preference
and with this proposal to be revisited
annually;
(b) There is no release
sought from the payment of the first respondent’s debt save for
a reservation of rights regarding
the concurrent portion of the
applicant’s claim;
(c) The on-going role of
the business of the first respondent is to facilitate the existing
lease agreement with Ithemba Transport,
with same to be honoured on
the terms and conditions of such lease agreement;
(d) The free residue
derived from the income generated from the lease agreement shall be
utilized to pay creditors claims. The proceeds
of the immovable
asset, if sold, will likewise be used to settle the creditor’s
claims;
(e) Preference shall be
given to the secured creditor, followed by preferent and concurrent
creditors in that order;
(f) Regarding the
benefits of adopting the business rescue plan, a liquidation would
result in the preferred and concurrent creditors
receiving no
dividend, the costs of the failed rescue business proceedings being
added to the administrative costs in liquidation
thus resulting in a
reduction of any dividend to all affected parties, including the
secure creditor. The adoption of a business
rescue plan will mean
that the business will be on going and will also be generating a
meaningful monthly income which can be used
to reduce the ring fence
creditor’s claims and meet its contractual obligation.
(g) Should the business
rescue plan be adopted, it shall have the added benefit to allow for
an indulgence to comprehensively market
the property under more
favourable conditions;
(h) The projective
statement of income and expenses is that the income for the next
three years’ be R480 000 per year
and the expenditure
increase from R170 000 in the first year to R187 000 in the
second year and R205 700 in the
third year;
(i) The material
assumption made is that the lease remains in place for the next three
years.
[24] Most of the debate
centred on the proper interpretation of the terms of the proposed
business plan, which are unclear and vague
in many respects.
15
Apart from the reference
to the proceeds of the immovable asset ‘if sold’
16
being used to settle
creditor’s claims, there is no reference to it being a term of
the plan that the property will be sold,
or when or on what terms. On
the contrary, the material assumption that the lease remains in place
for the next three years with
the predicted income flow, presupposes
the property not being disposed of and that the business plan will
continue with the lease
being intact with the income flow derived
therefrom accruing to the first respondent. Obviously during that
time there would be
an opportunity to ‘comprehensively market
the property’, but that result would not flow as a term or
obligation in
terms of the business rescue plan.
[25] I was also urged to
have regard to the sole director’s report, summarised earlier
in this judgment, in determining the
question whether there is no
reasonable basis for rescuing the first respondent. This report also
does not expressly refer to the
property being sold, but it was
argued that this was necessarily implied as the report referred to an
admitted debt of approximately
R12 000 000 (the
indebtedness to the applicant) and continued that ‘if given the
opportunity under the supervision
of a business rescue practitioner’
[it would be] able to settle the full extent of the creditors’
and ‘may settle
all debts’, which, the argument ran,
would only be possible if the immovable properties were indeed sold.
[26] The problem however,
is that the business rescue plan does not state that there will be a
sale of the properties. As it stands,
it is not a term that the
properties will be sold. The properties could be retained for the
foreseeable future with the only benefit
accruing to creditors being
that derived from the rental income. It is patently clear that a
payment of R20 000 per month,
being that contemplated in terms
of the plan, will not even assist in respect of the secondary goal of
business rescue. The business
plan, without expressly providing for a
sale and on what terms and within what time, and indeed postulating
and proceeding on the
assumption that the lease will remain in place
for the next three years, does not disclose a reasonable prospect for
rescuing the
first respondent. All it will achieve and ensure is
keeping the lease intact for the benefit of the lessee.
[27] However, even if the
business plan could be construed as involving a sale, even at
R17 500 000, if that was possible
and realisable, such a
sale by the business rescue practitioner (as opposed to a liquidator
selling the property as a whole) ‘offers
no more than an
alternative, informal kind of winding up of the company, outside the
liquidation provisions of the 1973
Companies Act …’
>
17
In the
Oakdene
case Brand JA
remarked
18
that
he did “… not believe, however, that this could have
been the intention of creating business rescue as an institution.
For
instance, the mere savings on the costs of the winding up process in
accordance with the existing liquidation provisions could
hardly
justify the separate institution of business rescue.
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’. I fully agree with that statement.
[28] The potential
prospect for rescuing the company by a business practitioner being
able to obtain a better price for the property
than a liquidator, was
also dismissed on the grounds that this ‘appears to rest on no
more than pure speculation’.
Brand JA stated at para [34]:
‘
[The
appellants’] second ground was that the remuneration of the
liquidator would exceed that of the business rescue practitioner.
It
departs from the premise that the fees of the liquidator are
calculated as a percentage of the assets of the company, while
those
of the business rescue practitioner are based on a daily rate.’
Although the facts
in
casu
obviously
differ from those in the
Oakdene
case, there are other
disputes remaining between the applicant and first respondent,
notably that relating to the extent of the
concurrent portion of the
applicant’s claim which would have to be addressed and might
form the subject of ongoing litigation
involving the business rescue
practitioner. Although perhaps not quite a ‘litany’ as in
the
Oakdene
matter, this dispute will
cause considerable delays, whereas if the first respondent is
liquidated the applicant would have to submit
its claim which would
then be scrutinised by a professional liquidator objectively and
either be admitted or rejected. This leads
me to a similar conclusion
to that arrived at in the
Oakdene
matter that:
‘…
liquidation
proceedings are in fact better geared for the situation that arose in
this case’.
19
[29] Although there has
been no expressly declared intent by the applicant to vote against
the business plan which has been proposed,
it is clear that the
applicant will not vote in favour of the adoption of the business
plan. It was argued on behalf of the first
respondent that this is
not a conclusive answer as the vote by the applicant against the
business plan when it is put to the vote,
would not be the end of the
matter but could result in further remedies being pursued in terms of
s 153
(1) (a) (ii) or
s 153
(1) (b) (ii) of the Act. The possibility
of a business rescue plan not being sanctioned by the required
majority of creditors,
thus making it an exercise in futility, was
also considered in the
Oakdene
case. Brand JA
20
said the following:
‘
If
the statement is intended to convey that the declared intent to
oppose by the majority creditors should in principle be ignored
in
considering business rescue, I do not agree. As I see it, the
applicant for business rescue is bound to establish reasonable
grounds for the prospect of rescuing the company. If the majority
creditors declare that they will oppose any business rescue scheme
based on those grounds, I see no reason why that proclaimed
opposition should be ignored. Unless of course, that attitude can be
said to be unreasonable or mala fide.’
Referring to further
action which could be taken following the rejection of a proposed
rescue plan he commented:
‘
But
that, of course, will take time and attract further costs. Moreover,
the court is unlikely to interfere with the creditors’
decision
unless their attitude was unreasonable’.
I fully endorse these
statements. Having regard to what is proposed by the rescue business
practitioner it is highly improbable
that a court would conclude that
a vote by the applicant against the plan would be unreasonable or
mala fide
21
.
[30] Even if the sale of
the properties was to proceed on a valuation of R17 500 000,
and after deduction of costs there
would be sufficient funds to
discharge all liabilities, it would mean at best that the first
respondent might be left with a small
residue, which itself is
inconsistent with its stated objective of being a property holding
company. No purpose will be served
in allowing a business rescue plan
to proceed to achieve that purpose and if that was the likely factual
scenario to arise, it
could not in my view be said that there was a
reasonable prospect for rescuing the company. Indeed, it would show
there is no reasonable
prospect for rescuing the company for its
stated and intended objective and purpose.
[31] It follows that the
resolution should be set aside. I am also satisfied, insofar as
relevant, that it is just and equitable
that the resolution be set
aside.
THE LIQUIDATION OF THE
FIRST RESPONDENT:
[32] In that event, I was
urged to employ the discretionary power I have in terms of
s 130
(5)
of the Act to ‘make any further necessary and appropriate
order, including (an) order placing the company under liquidation
…’.
No such relief was of course foreshadowed in the Notice of Motion.
[33] In
Oakdene
,
after the court of first instance had concluded that there was no
reasonable prospect for rescuing the company, an order for its
liquidation was granted. In that matter however such an order had
been sought by the remaining respondents, admitted creditors
of the
company concerned, claiming an order of liquidation.
[34] Although a
discretionary power,
s 130
(5) (c) (i) certainly contemplates that an
order may be granted placing the first respondent under liquidation
upon an order being
made setting aside a resolution that it be placed
under business rescue.
[35] All the requirements
relating to filing the necessary security and notice being given to
the South African Revenue Services
have been attended to in reply.
[36] The request that the
first respondent be placed under liquidation following the setting
aside of the resolution, is opposed
by the first respondent on the
basis that procedurally it had not been appraised of the possibility
of such an order being sought,
until this possibility was raised in
reply and then confirmed in the applicant’s heads of argument.
The submission was that
there might be grounds upon which such
liquidation might legitimately be capable of being opposed.
[37] It is difficult to
conceive of any substantive grounds upon which the final liquidation
of the first respondent may be opposed,
but this is not for me to
speculate. The power is granted in terms of
s 130
(5) (c) to grant an
order placing the first respondent under liquidation.
Prima facie
a case for at least its provisional liquidation has been made out. If
there are grounds upon which to oppose such a provisional
order, then
these can always be advanced in opposition to the grant of the final
winding up order. In the circumstances it seems
to me that the
interests of justice require that a provisional winding up order
should be granted.
[38] The order granted is
accordingly as follows:
1. The resolution of the
first respondent in terms of
s 129
of the Company’s Act No. 71
of 2008 passed on 6 May 2013 that the first respondent voluntarily
begins business rescue proceedings,
be and is hereby set aside.
2. The first respondent
is directed to pay the costs of the application.
3. In terms of
s 130
(5)
(c) (i) of Act 71 of 2008 an order is granted placing the first
respondent under provisional winding up.
4. The respondent and all
other interested parties are called upon to show cause before this
court sitting at Durban at 9h30 on
the 26
th
day of
September 2013 why a final winding up order shall not be granted.
5. It is directed that a
copy of this order be served on the respondent at its registered
office forthwith and be published once
in the Government Gazette and
the Mercury Newspaper on or before the 20
th
day of
September 2013.
______________________
DATE OF HEARING: 13/8/13.
DATE JUDGMENT DELIVERED:
22
nd
August 2013
APPLICANT’S
COUNSEL: ADV. N.D. HOLLIS S C
APPLICANT’S
ATTORNEYS: LYLE & LAMBERT INC.
TEL.: 031 309 8576
FIRST RESPONDENT’S
COUNSEL: ADV. J C. KING S C
FIRST RESPONDENT’S
ATTORNEYS: ABBAS LATIB AND COMPANY
TEL.: 031 303 8950
1
Hereinafter
referred to as ‘the Act’.
2
The
business rescue practitioner has been joined as the Third Respondent
in the application.
3
In
terms of a signed agreement of lease concluded between the first
respondent and Itemba Transport (Pty) Ltd. (a company represented
by
the son-in-law and another family member of the sole director of the
first respondent), the property generates a rental income
of R40 000
per month. The occupation date of that lease agreement is 1 January
2012. This lease agreement is stated to be
for a period of 60 months
with a renewal option. However, at any time during the duration of
the lease, the tenant may on one
months’ written notice
terminate the lease, it being expressly recorded that this option is
available to the lessee and
not the lessor.
4
Presumably
the sole director of the first respondent.
5
Subparagraph
(b) provides that the business rescue practitioner may be afforded
sufficient time to form an opinion whether or
not the company is
financially distressed or whether there is a reasonable prospect of
rescuing the company. The practitioner
has already formed an opinion
on these issues.
6
In
casu
, no order was sought pursuant to the provisions of s
130(5)(c)(ii).
7
The
Act uses the proposition ‘for’ rather than ‘of’.
Nothing appears to turn on this.
8
[2013]
ZASCA 68
(27 May 2013).
9
‘
business
rescue’ is defined to mean ‘proceedings to facilitate
the rehabilitation of a company that is financially
distressed by
providing for-
the
temporary supervision of the company, and of the management of its
affairs, business and property;
a
temporary moratorium on the rights of claimants against the company
or in respect of property in its possession; and
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’
10
See
Oakdene
case para 23.
11
According
to a valuation attached to the business rescue plan, the open market
value of the properties amounts to R10 500 000
and the
comparative forced sale value amounts to R 7 300 000.
Either will be insufficient to discharge the debt owing
to the
applicant alone. The replying affidavit suggests with reference to
an extract from the Pam Golding estate agent’s
website that
the property has been placed on the market for R17 500 000.
Even if it could fetch that price, after deduction
of the costs
relating to the sale such as commission and the like, the nett
proceeds will still be insufficient to pay the total
liabilities of
the first respondent on its version.
12
S
ee
Oakdene
case
para [26].
13
At
para [31].
14
Sometimes
also referred to as a discretion in the wide sense, a term which
should rather be avoided – see
Oakdene
case paras [18]
to [21], particularly para [20].
15
In
Prospec Investments (Pty) Ltd v Pacific Coats Investments 97 Ltd
2013 (1) SA 542
(FB) Van der Merwe J held that vague and mere
speculative suggestions will not suffice.
16
Not
‘when sold’.
17
Oakdene
case at para [33].
18
At
para [33]
19
At
para [35].
20
At
para [38].
21
Having
regard to the extent of the applicant’s admitted claim
in
casu
and
what has been proposed as an income stream, the decision by the
applicant to vote against the business plan would not seem
to me to
be an unreasonable attitude to adopt. The voting power wielded by
the applicant would defeat any vote for an adoption
of the plan in
terms of s 152 (2) of the Act.