IN THE HIGH COURT OF SOUTH AFRICA
FREE STA TE DIVISION, BLOEMFONTEIN
In the matter between:
FIRST RAND BANK LTD
(Acting through its Rand Merchant Bank Division)
INVESTEC BANK LTD
and
AZRAPART (PTY) LTD
THE COMPANIES AND INTELLECTUAL PROPERTY
COMMISSION Reportable/Not reportable
Case number: 4437 /2024
First Applicant
Second Applicant
First Respondent
Second Respondent
Neutral Citation: First Rand Bank Ltd and Another v Azrapart (Ply) Ltd and Another
(4437/2024) [2025] ZAFSHC 162 (5 June 2025)
Coram: Loubser J
Heard: 9 May 2025
Delivered: 5 June 2025
Summary: Application to place company in business rescue -defence of imminent
payment of substantial cash injection to the company by a foreign entity raised -whether it
has now been shown that the company is no longer in financial distress
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ORDER
1 The first respondent is placed under supervision and business rescue proceedings
are commenced in respect of the first respondent in terms of s 131 of the Companies Act
71 of 2008, as amended.
2 Piers Michael Marsden and Lance Schapiro are appointed as the joint interim
business rescue practitioners of the first respondent.
3 The applicants are to give notice of this order to all known affected persons of the
first respondent within five days of the order having been granted.
4 The applicants are to serve a copy of this order on the first respondent at its
registered address, and on the second respondent by way of email to
businessrescue@cipc.co.za.
5 The applicants' costs of this application on the attorney and own client scale,
including the costs of two counsel where so employed, shall be costs in the business
rescue of the first respondent.
6 The applicant's costs in the referral application on the party and party scale,
including the costs of two counsel where so employed on scale B, shall be costs in the
business rescue of the first respondent.
JUDGMENT
LoubserJ
[1] This is an application for the first respondent to be placed under supervision and
that business rescue proceedings be commenced with, in respect of the first respondent
in terms of s 131 of the Companies Act 71 of 2008. In terms of s 131(4)(a) of the said Act,
the court may make such an order if the court is satisfied that the company is financially
distressed or it is otherwise just and equitable to do so for financial reasons, and if there
is a reasonable prospect for rescuing the company.
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[2] This court has already delivered judgment in this matter on 27 March 2025. In the
judgment , the court pointed out that, on the papers before it, it is common cause between
the parties that the total outstanding amount owing by the first respondent to the
applicants is R2.3 billion, and that the first respondent is unable to pay it. The court further
mentioned that it is the case for the applicants that the first respondent can be
successfully rescued, and that the first respondent does not dispute such a prospect. As
a result, the court found that there is no doubt strong indications that the first respondent
is in financial distress.
[3] In its judgment, the court then dealt with the main defence raised by the first
respondent in the application that it be placed in business rescue. This defence, which it
raised right from the beginning on the papers, consists of the following: The first
respondent was in the process of finalizing a transaction with a company registered in the
United Kingdom. In terms of this transaction, first respondent would receive a capital
injection of R2.6 billion from that company, which is known as Redcore Hospitality
Holdings Limited (Redcore). In an affidavit filed on behalf of the first respondent , there
was an undertaking that the first respondent would make payment of the R2.6 billion so
received to the applicants , which would be more than sufficient to cover the liability of the
first respondent towards the applicants.
[4] The prospect of this capital injection became a pivotal issue in the application.
This court pointed out in its judgment that different courts of this Division have postponed
the proceedings over time to allow the transaction to come to fruition, because it speaks
for itself that the first respondent would no longer be in financial distress in relation to the
applicants upon receipt of the R2.6 billion from Redcore.
[5] When the application finally came before this court for hearing on 28 November
2024, it was still not clear whether Redcore would definitely pay the R2.6 billion to the first
respondent. The court therefore made certain orders to reach clarity on this question, and
reserved final judgment in the application accordingly.
[6] It also needs mentioning that three days before the hearing on 28 November
2024, the first respondent filed a substantive application for an order directing that oral
evidence be heard on a certain dispute between the parties in the application . This
application was opposed by the applicants. I do not deem it necessary to repeat the
nature of the dispute concerned, for it is fully dealt with in the judgment of 27 March 2025.
[7] Eventually , the court made the following orders in its judgment of 27 March 2025:
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'[1] The First Respondent must file a supplementary affidavit on or before 24 April 2025 informing
the Court and the Applicants of the progress maqe in obtaining the Redcore funds and the payment
thereof to the Applicants.
[2] The Applicants are granted leave to respond to the First Respondent's affidavit, should they
wish to do so, by the filing of a responding affidavit on or before 9 May 2025.
[3] No further extensions of time will be allowed, and the Court will finally decide this application
after the 9th of May 2025 on the papers as they then stand.
[4] The application for a referral to hear oral evidence in respect of the dispute concerning the
signature of Mr. Georgiou on the cross-guarantees, is dismissed.
[5] Final judgment in the main application and in respect of the costs in the referral application
is reserved for the period following upon 9 May 2025.'
[8] On 24 April 2025 the first respondent filed a supplementary affidavit in compliance
with the Court order of 27 March 2025. In this affidavit Mr. Georgiou, the sole director of
the first respondent, informed that the promised R2.6 billion has not been forthcoming
from Redcore as yet. However, he further informed that he has been in constant contact
with Redcore to ascertain when the R2.6 billion would be transferred to Peresec in South
Africa for payment to the first respondent. In every discussion with a director of Redcore,
it was confirmed that the full funding of R2.6 billion was available, and that Redcore was
committed to the transaction with the first respondent, Mr. Georgiou stated. He also
annexed a letter from Redcore dated 24 April 2025, in which it is mentioned that Redcore
has instructed Corpay Inc. to make payment to Peresec a Euro equivalent amount of R2.6
billion out of Redcore's Cambridge Mercantile Bank account when the entire capital is
processed. In the letter it is further confirmed that Redcore has already commenced and
is giving utmost priority to the initial processes required for the transfer of the funds in
terms of the regulations of the South African Reserve Bank and any other regulatory
bodies as it may be applicable.
[9] Mr. Georgiou concluded in his affidavit that he believes that Redcore will ultimately
deliver and pay the R2.6 billion. He has been promised by Redcore and the local agent
that he will receive written proof and confirmation of the R2.6 billion in Corpay's UK
account, but unfortunately , he has not yet received all of this written proot, he says.
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[1 0] In response to this supplementary affidavit, the applicants filed a responding
affidavit on 9 May 2025. In this affidavit, the applicants deny any prospect of the Red core
transaction being finalized and they submit that it is in the interests of not only the
applicants, but also other affected persons that the first respondents be placed in
business rescue without any further delay.
[11] The applicants mention that they have been appointed a well-known law firm in
the UK to conduct independent investigations in regard to Redcore and to provide discrete
advice with respect to publicly available information on Redcore. In particular, the
applicants wanted advice regarding the financial statements which Redcore is required
to file with the Companies House in the United Kingdom. The applicants annexed an
affidavit of the appointed law firm, deposed to by a director of the law firm, to their
responding affidavit. This affidavit shows that Redcore has submitted only unaudited
financial statements for the years 2021, 2022 and 2023 to the Companies House.
[12] The UK law firm further established that the 2023 financial statements of Redcore
note that Redcore's accounts were exempt from audit pursuant to s 447 of the United
Kingdom Companies Act of 2006. In terms of that section, a company qualifies for an
exemption from audit if it satisfies two or more of the following requirements: not having
a turnover of more than €10.2 million, not having a balance sheet total of more than €5.1
million, and not having more than 50 employees. According to the affidavit, the law firm
found that, in fact, Redcore reported no turnover for the applicable period, which is the
year 2023, and reported that it had no employees for the period.
[13] It therefore appears to be clear, on a balance of probabilities, that Redcore will not
be able to provide the R2.6 billion injection to the First Respondent soon, or at all. To
make matter worse, no affidavits or other documents , including any bank confirmation
letters regarding the availability of funds on the part of Red core, have been submitted by
the first respondent in these proceedings. Meanwhile , the first respondent remains
financially distressed and out of formal business proceedings . The applicants say that
they are severely prejudiced by this situation as, inter alia, the asset forming the very
subject of their security (the Fourways Mall) cannot be fully and properly managed and
maintained. Having regard to the many extensions of time afforded to the first respondent
over a period of some nine months since the launching of the application to obtain the
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injection from Red core, I am of the view that the matter now needs to be brought to finality
in the interests of justice.
[14] However, it needs mentioning that on 9 May 2025 the first respondent submitted
a further affidavit with the consent of the applicants' attorneys. In this affidavit Mr.
Georgiou annexed written confirmation from Redcore's attorneys in Luxembourg that
Redcore has access to a total equity funding facility of €750 million, and that the funding
or portions thereof is made available, and flows based on unconditional confirmation of
transactions as and when instructed by Redcore Hospitality Holdings Limited. All banking
transactions will be effected through the above bank accounts, the attorneys say. The
bank referred to is Corpay UK, and the amount of €750 million far exceeds the amount of
R2.6 billion, Mr. Georgiou pointed out.
[15] He also annexed a letter from Redcore itself, which is dated 8 May 2025. In this
letter Redcore says the following:
'Please find the confirmation that the funding is in place. The equity funding will be released as
per our financial arrangements, and upon receipt of the unconditional and irrevocable confirmation
from the existing funders of Azrapart (Pty) Limited of the unconditional release, transfer and
entirely unencumbered title of the subject property.'
According to Mr. Georgiou , it is now up to the Applicants to provide such confirmation so
that the funds could be transferred.
[16] In a responding affidavit filed on 12 May 2025, the applicants point out that the
documents attached by Mr. Georgiou in the first respondent's further affidavit do not
constitute any proof and confirmation that Redcore has access to the amount of R2.6
billion. They point out that the documents now produced are merely a repetition of
documents already produced in the first respondent's answering affidavit in 2024. For
instance, annexure AA 12 to the answering affidavit consisted of a letter from Corpay
which reads as follows:
'We hereby confirm that Redcore has a facility in place for up to €750 million, of which €150 million
has been allocated for a potential transaction between Redcore Hospitality Limited and Azrapart
(Pty) Limited (and related entities). Transfer of funds are subject to conclusion of irrevocable and
unconditional transaction documents.'
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[17] The applicants further point out that it is apparently required that they release
(presumably Fourways Mall) from their security prior to the making of the payment by
Redcore. In this respect, the applicants say that if Redcore really had the funds, then
Redcore could have at least provided a bank guarantee from a reputable financial
institution providing for immediate payment against the release of the applicable security.
This they had not done, and it shows that they do not have the R6.2 billion available, the
applicants say.
[18] It appears then that, having regard to all the information placed before it, this Court
still cannot find with any measure of certainty that the R2.6 billion will be transferred to
the first respondent by Redcore. It follows that the first respondent should now be placed
in business rescue. Such a step will enable the independent rescue practitioners to
assess any agreement with Redcore, and if determined viable, to pursue such
transactions further in the first respondent's business rescue proceedings.
[19] The application therefore succeeds, and the following orders are made in terms of
the Notice of Motion:
1 The first respondent is placed under supervision and business rescue proceedings
are commenced in respect of the first respondent in terms of s 131 of the Companies Act
71 of 2008, as amended.
2 Piers Michael Marsden and Lance Schapiro are appointed as the joint interim
business rescue practitioners of the first respondent.
3 The applicants are to give notice of this order to all known affected persons of the
first respondent within five days of the order having been granted.
4 The applicants are to serve a copy of this order on the first respondent at its
registered address, and on the second respondent by way of email to
businessrescue@cipc.co.za.
5 The applicants ' costs of this application on the attorney and own client scale,
including the costs of two counsel where so employed, shall be costs in the business
rescue of the first respondent.
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6 The applicant's costs in the referral application on the party and party scale,
including the costs of two counsel where so employed on scale B, shall be costs in the
business rescue of the first respondent.
Appearances
For the Applicant:
Instructed by:
For the First Respondent:
Instructed by: M Antonie SC, with him A Cooke
Edward Nathan Sonnenbergs Inc,
c/o Phatshoane Henney Inc., Bloemfontein
KW LOdritz SC, with him D Sive
Fluxmans Inc.,
c/o EG Cooper Majiedt Inc, Bloemfontein 9