IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)

Case no:24391/ 2024

In the matter between:

ADRIAN ANTHONY JOHN MOORS FIRST APPLICANT

THE TRUSTEES FOR THE TIME BEING
OF THE DOROTHEA CHARLOTTE MOORS
FAMILY TRUST SECOND APPLICANT

HENDRIKA BARENDINA ZONDAGH THIRD APPLICANT

and

VELDSKOEN CAPITAL ( PTY) LTD FIRST RESPONDENT

VELDSKOEN SHOES (PTY) LTD SECOND RESPONDENT

ROSS ZONDAGH THIRD RESPONDENT

NICOLAAS CHRISTOPHER DREYER FOURTH RESPONDENT

THE TRUSTEES FOR THE TIME BEING
OF THE DREYER FAMILY TRUST FIFTH RESPONDENT

FREYA MARY DREYER SIXTH RESPONDENT

Case Number: 2025 -015315

In the matter between:

THE TRUSTEES FOR THE TIME BEING OF THE
DOROTHEA CHARLOTTE MOORS FAMILY TRUST FIRST APPLICANT

THE TRUSTEES FOR
THE ADRIAN MOORS FAMILY TRUST SECOND APPLICANT

and

VELDSKOEN SHOES (PTY) LTD FIRST RESPONDENT

VELDSKOEN CAPITAL (PTY) LTD SECOND RESPONDENT

ROSS ZONDAGH THIRD RESPONDENT

NICOLAAS CHRISTOPHER DREYER FOURTH RESPONDENT

COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION FIFTH RESPONDENT

Coram: BHOOPCHAND AJ
Heard : 3 June 2025
Delivered : 20 June 2025


JUDGMENT



Bhoopchand AJ:

[1] The humble Veldskoen , born of the Khoisan, shaped by Dutch hands, and now
walking the avenues of the world , carries more than leather and thread. It bears the
weight of legacy, of cultures stitched together through time. As this Court considers the
dispute at hand, we are reminded: some symbols transcend ownership. A token of
history such a s this calls not for conflict, but for custodianship, not for possession, but
preservation.

[2] The parties seek adjudication on three applications under two cases . In case
number 24391/24, the Applicants , Adrian Anthony John Moors (Moors), the Trustees
for the time being of the Dorothea Charlotte Moors Family Trust (DCMF Trust), and
Hendrika Barendina Zondagh (Hendrika), seek interim interdictory relief (the Interdict
Application) relating to certain resolutions taken by the board of the First Respondent,
Veldskoen Capital (VC) and the Second Respondent , Veldskoen Shoes (VS), pending
the outcome of arbitration proceedings . The directors of the board of VC and VS
material to this application include Moors, Hendrika, the Third R espondent, Ross
Zondagh (Zondagh), and the Fourth Respondent, Nicolaas Christopher Dreyer
(Dreyer) .

[3] The Respondents initiated a counterapplication (the Counterapplication) to the
Interdict Application and seek to decl are Moors and Hendrika delinquent directors, and
directing the transfer of the shares of the D CMF Trust to Zondagh, the Fifth
Respondent, the Trustees for the time being of the Dreyer Family Trust (DF) trust, and
the Sixth Respondent, Freya Mary Dreyer (F reya) and other relief following the direct ory
relief.

[4] The Interdict Application was brought on an urgent basis on 13 November 2024.
The counterapplication was filed on 17 March 2025. The Applicants in the
counterapplication shall be cited as they are in the Interdict Application. The Court
directed on application that the counterapplication would be heard together with the
Business Rescue Application. The Respondents sought to strike o ut certain content of
the Applicants' founding affidavit in the Interdict applica tion by notice dated 6 December
2024.

[5] In case number 2025 -015315, the DC MF Trust and the Second Applicant, the
Trustees for the Adrian Moors Family Trust (AMF) Trust, applied urgently to place VS
under business rescue (the Business Rescue Application). The respondents in this
application are VS, VC, Zondagh, Dreyer, and the Co mpanies and Intellectual Property
Commission. The la st of the Respondents took no part in this application. An
application to admit a belated supplementary affidavit by the Applicants was dismissed.
The urgency of the applications was no longer in issue . The Court was assigned to hear
the matters on a pre -determined date by the Honourable Judge President of the
division.

THE INTERDICT APPLICATION

[6] VC is the holding company that owns , funds, and controls VS. The DCMF Trust
owns a third of the shareholding of VC. The DCMF Trust secured a pproximately
R18 567 120 for VC and VS between 2021 and 2024 , and the financial support of
Investec Bank, which has financed the capital and funding through the structure of VC,
and on the st rength of the DCMF Trust's balance sheet and suretyships . Investec has
provided banking facilities to VS. VS began in 2016. Dreyer and Zondagh formed the
company.

[7] The Interdict Application concerns the tenure of Hendrika as a director of VS and
four round -robin resolutions , two taken on 17 October 2024, and two on 1 November
2024 . The first resolution was in the name of VC and drafted to take all necessary steps
to remove Hendrika as a director of VS. The second resolution was a shareholder
resolution in the name of V S, but signed by VC to notify Hendrika of VC’s intention to
pass a resolution to remove her as a director of VS. The third resolution was a board
resolution of VS resolving to place Hendrika on precautionary suspension and granting
full executive control of the company to Zondagh and Dreyer . The fourth resolution , a
shareholder’s resolution in the name of V S, resolved to remove Hendrika as a director
of VS.

[8] The Applicants sought the issue of a rule nisi pending the outcome of the
arbitration proceedings , which called upon Zondagh, Dreyer , and the DF Trust , the
Respondents material to the Interdict Application to show cause why the resolutions
should not be set aside and declared invalid. In addition, the interim relief sought to
restrain the Respondents from proceeding with the implementation of the resolutions or
passing further resolutions to cure the deficiencies in them pending the outcome of the
arbitration proceedings . The Court was informed from the Bar that the Applicants
restricted the relief they sought to paragraphs 2.2 and 3 of the notice of motion. The
Respondents argued the matter on the basis that the inquiry narrows to the procedural
validity of the resolution's adoption.

[9] The nub of the Interdict Application , then, is whet her proper notice was given to
Moors and Hendrika of the intention to adopt the resolutions . Moors presented the
Applicant’s case in his founding affidavit . He is the shareholder representative of the
DCMF Trust . He referred to an additional provision of the October resolutions wherein
Dreyer purportedly resolved to appoint Zondagh as a director of VC and VS with
immediate effect. As alluded to, Dreyer and Zondagh founded VS. Zondagh had
resigned in 2022 from the boards to pursue the expansion of VS into the markets of the
United States of America.

[10] The resolutions of 17 October 2024 were based on the provisions of sections,
57,68, 71and s74 of the Companies Act 71 of 2008 (the Act) . Section 74 states that
except to the extent that a memorandum of incorporation (MOI) of a company provides
otherwise, a decision that could be voted on at a meeting of a board of the company ,
may instead be adopted by written consent of a major ity of the directors, given in
person , or by electronic communication provided that each director has received notice
of the matter to be decided. A decision made in the manner contemplated in s74 i s of
the same effect as if it had been approved by voting at a meeting.

[11] Section 71 allows for the removal of a director by an ordinary resolution adopted
at a shareholders' meeting by the persons entitled to exercise voting rights in an
election of that director. Before the shareholders of a company may consider the
resolution, the director concerned must be given notice of the meeting and a copy of the
resolution, at least equivalent to that which a shareholder is entitled to receive,
irrespective of whether or not the direc tor is a shareholder of the company . The director
must be afforded a reasonable opportunity to make a presentation , in person or through
a representative, to the meeting before the resolution is put to a vote.

[12] The Applicants ’ attorneys informed Dreyer and Zondagh on 28 October 2024
that they were disputing the lawfulness of the October resolutions. They were also
requested not to proceed with the 1 November 2024 meeting. The Applicants were
informed on behalf of the Respondents that the October round robin resolutions were
valid under s74 of the Act. Notice periods were irrelevant. All that was required was for
the resolution to be sent to the directors. Once the round robin gathered the requisite
majority of two out of three , it was passed. The resolution to appoint Zondagh was valid
under s57 of the Act . The Applicants reminded the Respondents that s74 pays
precedence to the MOI.

[13] The resolution of 1 November 2024 that was circulated, was a round robin
resolution purportedly passed by the board of directors of the Company in terms of s 74
of the Act. It was intended to place Hendrika on precautionary suspension as the Chief
Executive Officer ( CEO ) and employee of the Company with immediate effect. The
complaints against her related to poor communication and stock management . A
suspension letter was sent to her dated 1 November 2024 , wherein a ll executive
authority , operational matters , and signing powers on behalf of the company were
removed from Hendrika and Moors and delegated to Dreyer and Zondagh . The latter
were empowered to act severally and not necessarily jointly. The resolutions taken on 1
November 2024 related to Hendrika’s suspension as CEO, the election of Ross as the
new director with effect from 17 October 2024 , the vesting of the signing powers and
the day-to-day management of the company in Dreyer and Zondagh , and the removal
of Hendrika as a director of the c ompany under section 71(1) of the Act.

[14] The Applicants informed the Respondents on 1 November 2024 of the
circumstances in which they received the November resolutions. The Applicants
disputed the validity of the resolutions , did not consider themselves b ound by them, and
demanded that the Respondents reverse the decisions .

[15] Moors asserted that the October and November resolutions were invalid and
unlawful . They were taken unilaterally by Dreyer and Zondagh without proper
notification to Moors. He was not allowed to participate in any discussions about them
or given time to consider them . The conduct , he contended, is in breach of the MOI as
well as the Act. The company documents that regulate VC and VS provide that any
removal of the CEO and managing director is a ‘reserved matter’ and requires a special
resolution by the shareholders . Hendrika was purportedly removed without notice and
the passing of a special resolution.

[16] Moors contended tha t he, as a director , could not be excluded from the
management and control of the company . Moors contended that Dreyer and Zondagh
took control of the Veldskoen business and denied him, the representative of the DCMF
Trust and major funder , and director appointed by it , any insight and involvement in its
management, operation, and control. The DCMF Trust’s right to appoint a director to
the board of VS ha d been undermined.

[17] Dreyer, answering Moors' averments, responded that the procedural asp ects of
the decisions taken by the board were irrelevant . The process prescribed by s74 did not
require discussions or time to consider. He contended that neither the removal of a
director nor the suspension of a CEO is a reserved matter. Moors ha d never been
excluded from exercising his rights and functions as a non -executive director or as a
Trustee of the DCMF Trust . The DCMF Trust had not been excluded from exercising its
rights as a shareholder of V C. He denied that he or Zondagh ever denied or negated
the DCMF Trust’s right to appoint a director to the board of VS . To the extent that
Moors contended that the DCMF Trust had an express right to appoint a member to
VS’s board of directors, beyond the general rights of a shareholder, he was invited to
disclose the source of this alleged right.

[18] Moors described Dreyer’ s response as incorrect . S74(1) expressly required that
each director receive notice of the matter to be decided . Informed knowledge that a
resolution was circulated did not suffice. The statut e requires formal notice , which
ensures that all directors have a meaningful opportunity to participate in decision
making, even when resolutions are adopted outside a formal meeting. Dreyer ’s
allegation that no discussion or time was required misconceived the purpose of s74 of
the Act . The provision is designed to prevent ambush and unilateral decision -making . It
ensures that every director receives proper notice so that they can evaluate the
proposed resolution, raise objections or engage with their co-directors . Mere awareness
is not enough. He was not given proper notice , and failure to do so render ed the
resolutions invalid.

[19] The circumstances relating to the October resolutions were that the first was sent
to Moors by email at 11 :50:24 on 17 October 2024. The email stated : ‘Please see
attached.’ The second of the same date was sent to Moors and Hendrika at 11:51:03 ,
stating ‘please see notice attached’. Moors asserts that the second email was not a
notice but a purported resolution that was not taken at a duly convened meeting of the
board of V C. He was not notified of the meetings , nor was he present at any meeting
that purported to authorise either of t he October resolutions . He contended that the
October resolutions are , on this basis alone, invalid and unlawful.

[20] In answer, Dreyer contended that Moors was aware as early as 10 October 2024
that he was going to suspend Hendrika for performance -related issues. Moors' attorney
had written to Ross and himself on 22 and 24 October 2024. The letter of 22 October
2024 acknowledged the steps being taken to suspend Hendrika as CEO and Director of
VS, but d id not raise any complaint thereto. Neither did the letter of 24 October 2024 ,
despite raising detailed allegations about other issues.

[21] If Moors was not provided with proper notice of the round robin meeting of 17
October 2024, then it follows that the resolutions of 17 October are invalid. If the
resolutions of 17 October 2024 are invalid , then those that followed on 1 November
2024 suffer the same fate. It would follow naturally that the status quo ante would be
restored . The deferred relief initially sought by the Applicants concerning the resolutions
would fall away. The Court would then have to pronounce on the further relief sought by
the Applicants.

[22] Directors can conduct the business of a company by way of a round robin
resolution under s74 of the Companies Act.1 Section 74 of the Act enables ‘a majority of

1 S74: ‘Directors acting other than at meeting –
the directors to pass a round robin resolution to avoid a formal meeting of directors ,
provided that, if this is to happen, each director has received notice of the matter to be
decided’. The proviso enables dir ectors to make an informed decision on the subject
matter contained in the resolution.2

[23] Our courts have emphasised the importance of giving notice to directors of a
meeting so that the participants are aware not only of the existence of a meeting but of
the nature of the business.3 The purpose of the notice is not only to inform directors of
the date of the meeting , but also the reason . There can surely be no difference between
the importance of a notice where a board meeting is called in terms of s73 o f the Act
and a notice when the provisions of s74 of the Act are invoked.4

[24] The Respondents a rgued that section 74 did not require notice in advance but
simply notice of the matter to be decided on the authority of Msibithi .5 The Applicants
complain that the resolutions were taken unilaterally by Dreyer and Zondagh without
proper notification to Moors. He was not allowed to participate in a ny discussions about
them or given time to consider them. Msibithi does not assist the Respondents in
counteracting the thrust of the Applicants’ complaint. To the extent that the Court must
pronounce on the resolutions , the notices given for the October resolutions did not
comply with the provisions of section 74 of the Act and are invalid. It follows that the
November resolutions are also invalid.

Requirements for an interim interdict

[25] What is discernible from the motivation to establish a t least a prima facie right to
obtain the relief sought in the Interdict Application is that the right arises from the Act

(1) Except to the extent that the Memorandum of Incorporation of a company provides otherwise,
a decision that could be voted on at a meeting of the board of that company may instead be
adopted by written consent of a majority of the directors, given in pe rson, or by electronic
communication, provided that each director has received notice of the matter to be decided.’
2 CDH Invest NV v Petrotank South Africa (Pty) Ltd & others (483/2018) [2019] ZASCA 53 (1 April
2019)
3 This principle is of long standing see African Organic Fertilizers and Associated Industries
Limited v Premier Fertilizers Ltd 1948 (3) SA 233 at 240 (N); Majola Investments (Pty) Ltd v
Uitzigt Properties (Pty) Ltd1961 (4) SA 705 (T) at 710 -711.
4 CDH at para 21
5 Msimbithi Investments (Pty) Ltd and Others v African Legend Investment (Pty) Ltd and Others
(628/2023) [2025] ZASCA 61 (14 May 2025) at para 70
and the MOI , and Dreyer and Zondagh contravened the provisions of both these
instruments . As a result , Moors was stripped of certain powers he enjoyed, and
Hendrika was relieved of her positions as CEO and director. The right was not
enunciated, but the Court is persuaded that the Moors and Hendrika do hold the right to
seek interim relief. The latter is expressed under the reasonable apprehension of
irreparable harm requirement. The Applicants assert that the consequences of Dreyer’s
and Zondagh’s unlawful conduct are not limited to the fin ancial loss that their
management of the business may occasion , but also to the harm caused to Moors and
Hendrika by being excluded from the company operations and communications with the
shoe manufacturer, the banks and the auditors. The context is Dreyer ’s and Zondagh’s
conduct and the result ant loss of trust concerning the US company. The Applicants
assert that the grant of the relief will not prejudice Dreye r and Zondagh . The
management of VS needs to be restored. Should the shareholders seek to constitute
the board differently, nothing precludes them from doing so, provided they act lawfully
and transparently. The Applicants contend that they have no other alternative remedy.

[26] The Respondents contended that the prohibitory relief sought by the Applicants
in prayer 3 of the Notice of Motion constituted ‘interim -interim’ reli ef, i.e., one which
would operate pending the return date of the rule, when application will be made for the
same interim relief under prayers 2.2 and 2.3. The Respondents contended that the
procedure is unprecedented, contrived to afford the Applicants tw o bites at the cherry ,
or two separate hearings, and is an abuse of process.

[27] The Applicants stated in written and oral argument that they persisted with just
paragraphs 2.2 and 3 of the notice of motion. The Court understood this to mean that
the Applicants sought an interim interdict restraining the Dreyer, Zondagh, and the DF
Trust from proceeding with the implementation of the October and November
resol utions or from passing further resolutions to cure the deficiencies in the resolutions
pending the outcome of the arbitration proceedings. The Court has dealt with the matter
on that basis. The Court accepts that the relief sought in the initial notice of motion is
unclear , but it also accepts the Applicant’s argument that the matter has evolved since it
was first filed.

[28] The last sentence in the preceding paragraph, unfortunately, sounds the death
knell for the Interdict Application. If the relief sou ght is generously interpreted, it still
amounts to a wholesale , incoherent amendment as argued by the Respondents. The
purported amendment is unclear. Paragraph 3 seeks an interim interdict under
paragraphs 2.2 and 2.3 pending the outcome of the applicatio n. In his submissions,
Counsel for the Applicants did not state that he persisted with the relief sought in
paragraph 2.3, i.e., to restore the status quo ante . Granting the interim interdict would
prejudice the Respondents. Even the narrowed ambit of the relief sought is unclear as
to the case they had to meet.

[29] The further aggravating factor concerning this application is that the Applicants
required the Court to traverse the voluminous papers without a clear indication of which
aspects of the Interim Interdict they intended to abandon . The Applicants d id not seek
declaratory or any other appropriate relief concerning the Octob er and November
resolutions, nor d id they ask the Court to find, as part of the relief they s ought, that the
resolutions were illegal or invalid. They have, of late, abandoned the relief sought
concerning the resolutions. Applicant’s legal team were obliged to define the relief
sought clearly and notify the Court in advance if they intended to abandon la rge parts of
the relief they sought. That they did not do.

[30] The Applicant’s heads of argument, filed on 13 May 2025, belatedly narrowed
the ambit of the application without a clear indication of whether they intended to pursue
any relief relating to the r esolutions. The stance taken by the Applicants is
incomprehensible. After hours spent considering the papers on the strength of the
submission from the Applicant’s Senior Counsel , that the Applicants intended to persist
with the application , the Court has concluded that the inordinate time spent on this part
of the case was an exercise in futility. The proper approach would have been for the
Applicants to withdraw the application and tender the Respondents' costs. By the time
the application was heard, there was a complete disconnect between the relief sought
and the case made out on the papers. Counsel was obliged to forewarn the Court . It is
inexplicable why the Applicant's legal team adopted this cursory attitude towards this
part of their case.

[31] The Interdict Applicant falls to be dismissed with an adverse costs order , the
scale of which shall be duly reflected .

APPLICATION TO STRIKE OUT

[32] The Respondents sought to strike out 36 items in the founding affidavit on the
basis that they are either irrelevant matter, argumentative, scandalous and/or vexatious
matter, or hearsay or disguised hearsay. The Respondents provided no elaboration of
the matter sought to be struck out. If the Respondents expected the Court to trawl
through each of the thirty -six impugned items on the skimpy basis presented to try and
determine the source of their complaint, then that attitude is deprecated. The Applicants
fared no better. There is a notice of opposition and nothing further. The application to
strike out is dismissed. Each part y is to absorb their own costs.

THE COUNTERAPPLICATION

[33] On 17 March 2025 , the Respondents instituted their counterapplication to the
interdict application. The range of orders sought included the declaration of Moors and
Hendrika as delinquent directors, restraining Moors from interfering in VS’s contractual
affairs with the First National Bank ( FNB) and from holding himself out as an executive
director , the appointment of a non-executive director to replace Moors, and compelling
the DCMF Trust to sell its shares in VC to the Respondents . The diverse relief is
founded under sections 76,77, 162, and 1 63 of the Companies Act.

[34] The purpose of s162(5) (c) is to protect investors against directors who grossly
abuse their position , intentionally or by gross negligence , inflict harm upon a company
or its subsidiary and act in a manner that amounts to gross negligence, wilful
misconduct or breach of trust in performing their functions and duties. or engaging in
serious misconduct.6 The qualifiers used to describe the applicable type of conduct ,
namely ‘gross’, ‘wilful ’, ‘intentional’ , ‘abuse’ and ‘serious’ , set a high bar to proving

6 Gihwala and Others v Grancy Property Ltd and Others (20760/14) [2016] ZASCA 35; [2016] 2 All
SA 649 (SCA); 2017 (2) SA 337 (SCA) (24 March 2016) (‘Gihwala ’) at para 144
delinquency.7 Gross negligence, although short of dolus eventualis , must involve a
departure from the standard of a reasonable person to such an extent that it may
properly be categorised as extreme, a conscious risk taking , a complete obtuseness of
mind or a total failure to take care. A lesser standard applied would blur the distinction
between ‘ordinary’ and ‘gross’ and would lose its validity.8

[35] The adjectives used in s162(5)(c) ensure that opportunistic, retaliatory, or simply
cynical applications to declare a director delinquent are sifted out expeditiously and
efficiently. The rationale is apparent as the consequences for the director are
significant. Directors who prove unworthy of this trust are prohibited from holding
office.9 The delinquent director appreciates that his conduct and reckless attitude could
cause the company harm.10 Extenuating circumstances or the fact that the conduct
might have caused the company a loss are irrelevant to this protective purpose.11 If the
complaints do not concern instances of the sort of conduct identified in s 162(5), it
would follow that the relief sought is u nsustainable and therefore without merit .12

[36] Hendrika and Moors oppose the application. They argue that the
counterapplication is procedurally abusive, factually untenable, and legally
misconceived. Moors denies that Dreyer or Zondagh are authorised to represent VC or
VS in these proceedings. The resolutions from which they purport to derive their
authority were challenged in the interdict application. Zondagh was unlawfully appointed
to the board of VS in October and November 2024 . The Dreyer Family Trust and Freya
Mary Dreyer do not hold shares in VS and accordingly lack standing under s163.
Moors was appointed as a non -executive director of VC on 2 9 September 2020 and of
VS from 14 December 2020 . Hendrika was appointed as COO of VS in October 2019,
CEO of VS on 1 September 2023, and director of VS from 16 May 2022. She was
removed on 1 November 2024.


7 See Ex parte Gore and others NNO 2013 (3) SA 382 (WCC), at para 34, in the context of a
close corporation
8 MV Stella Tingas: Transnet Ltd v Owners of the MV. Stella Tingas and An other 2003 (2) SA 473
(SCA), at para 7
9 Gihwala supra
10 Lewis Group Ltd v Woollam and Others [2017] 1 AllSA 192 WCC (‘Lewis Group ’)at para 16
11 Gihwala supra at para 144
12 Lewis Group at para 11
[37] It is appropriate at this juncture to introduce the overseas companies associated
with the South African group. Veldskoen UK (V UK) is the Engli sh company that
markets and sells the Veldskoen products in the United Kingdom. Veldskoen
Incorporated (VInc) is the parent company that owns Cali Buntu , its subsidiary. Many of
the issues in these applications concern the ownership of VInc and Cali Buntu . The
Veldskoen products are also marketed in Australia through an independent Australian
company .

[38] The pattern of alleged serious misconduct over a period of four months relates to
four issues. They are the unilateral suspension and supply of stock to Cali Buntu, the
unauthorised instruction to suspend payments from the Investec facility, manufacturing
claims against VS , and a strategy to exclude Dreyer and Zondagh from the bu siness.
The accusation that Moors and Hendrika manufactured claims against VS is premised
entirely upon Moors' actions relating to a subordination agreement .

The suspension of stock to Cali Buntu

[39] The evidence before the Court substantiates the Respondents' claim that the
alleged acts of delinquency transpired within a relatively brief period, commencing
around June 2024 and concluding with the resolutions to suspend and remove
Hendrika as director. At the same time, divorce proceedings between Hendrika and
Zondagh were underway. Zondagh had resigned from his directorship about two years
prior, and Hendrika's position as CEO was tenuous. Central to the ensuing dispute was
the transfer of $55,700 from Cali Buntu into Zondagh's and Dreyer’s bank account s.
Zondagh was unable to satisfactorily explain the transfer, having given differing
explanations for it. The ownership of the US companies, VInc and Cali Buntu, also
became contentious. There was an ass umption that these entities were subsidiaries of
VS; however, Dreyer and Zondagh asserted their ownership of the US companies .13
Cali Buntu was indebted to VS for approximately R10 million in stock and an additional
R3.5 million in loans, with minimal prospects of repayment. To date, Cali Buntu has
made payments of roughly R196,000 towards its total debt of about R13 million.


13 The most persuasive evidence of this is contained in the recording of the board meeting that
occurred on 10 October 2024.
[40] The Court does not intend to report diligently on the reams of allegations made
by Dreyer and Zondagh and trawl through each allegation and answer to determine
which side must prevail . An over view of the material facts does not point to the
delinquency of either Hendrika or Moors, let alone clear the high bar that Dreyer and
Zondagh would have had to surmount to prove that Hendrika and Moors were
delinquent. The Court shall examine the allegati ons underlying this application briefly.

[41] Following what has been said earlier, the position was that VS forwarded stock
and made loans to Cali Buntu on the representation that Cali Buntu belonged to VS.
The amounts involved were substantial , and there was little prospect of any sizeable
return on the investment. Very little was done to transfer ownership to VS. Neither
Moors nor Hendrika had any fiduciary duty to a US company that was not owned by or
a subsidiary of VS. They were directors of the South African company and owed their
duties to VC and VS. Moors thus disputed that VInc was controlled by VS. Dreyer and
Zondagh exercised sole and exclusive control over the US entity. They had no
enforceable reporting obligations to VS, and the Veldskoen Group had no control over
the US business. By the end of 2022 , VS was meant to acquire the remaining 50%
shareholding in Cali B untu. Dreyer and Zondagh were not the intended beneficiaries
through the Amer ican company, VInc, owned by them .

[42] Dreyer stated that o n 24 August 2024, the board of VC and VS met, with him,
Zondagh, Hendrika , and Moors in attendance. They reaffirmed the importance of the
Black November and December trading period in the USA and their state of
preparedness to exploit the expected surge in sales. They had to ensure an adequate
supply of stock from the manufactu rer, Hopewell, to Cali Buntu. Moors answered that a
meeting occurred on 20 August 2024 . The executives of VC and VS were updated on
the US operations, and Dreyer was working with the marketing team to prepare for the
Black November sales upswing. He denied that comprehensive preparations were
undertaken , including the placing of substantial orders with Hopewell . Hendrika
managed the planning for Black November as a part of her normal production routine.

[43] Dreyer asserted that t owards the end of September 2024, and without any board
approval or consultation with Dreyer or Zondagh, Hendrika, with the support of Moors,
suspended the supply of stock to Cali Buntu. The two contravened the strategic
decisions endorsed just weeks earli er. Moors denie d that he had decided to suspend
the stock to the US. Hendrika did. She provided her reasons for doing so , which
included the huge debt owed by Cali Buntu and the unresolved issue of the ownership
of the US business. Hendrika and Moors owed their fiduciary duty to VS . He supported
her decision. The decision was prudent, justified, and an unavoidable commercial
response to a situation of significant and unmanageable risk . It was made against the
backdrop of the transfer of $ 55,700 into the personal accounts of Dreyer and Zondagh ,
the uncertainty over the ownership of the US business, and the huge debt owed by Cali
Buntu to VS.

[44] Dreyer contended that about R4.3 million in US sa les was lost. VS forfeited an
estimated margin of R440 000 on these sales. The opportunity for Cali Buntu to repay
its existing Shopify loan and secure a new credit facility of $230,000 had been delayed.
Shopify is a platform that lets anyone create and ru n an online store to sell products
across the internet and in person. This prevented Cali Buntu from remitting these funds
to VS, hindered Cali Buntu from settling approximately 42% of its R10 million debt, and
deprived VS of working capital amounting to a bout R4.19 million. The stock ordered
from Hopewell to provision Cali Buntu for Black November and December was
cancelled, prompting Hopewell to threaten cancellation of their supply arrangement with
VS, a threat averted only by Dreyer and Zondagh’s interv ention. Dreyer suggested
rather incredulously that there was no rational connection between the reasons for
suspending the stock to the US and issues relating to the ownership of the entity, or the
transfer of funds to Zondagh’s account . He contended that if Hendrika and Moors were
made aware of the issues of ownership and transfer of funds by the auditors in Ju ly
2024, but nevertheless participated in the August meeting, why did they wait till
September to act?

[45] Moors addressed the issue , alleging that the US company was financially
distre ssed, if not insolvent. The allegations concerning shareholding and unexplained
transactions relating to the US company led to the ‘offer event’. The Respondents were
placed on terms to remedy their breach. They failed to do so. Moors and Hendrika
engaged with Dreyer and Zondagh earlier than September about the issues of
ownership and the transfer of funds. There is an email that confirms the engage ment on
27 August 2024.

[46] The Respondents contended that Hendrika, Moors , and by extension, the
DCMF Trust, contravened six of their statutory directorial duties, and one relating to the
shareholder agreement . As for the shareholder agreement, clause 5.2 concerned the
growth and generation of profit for the company and clause 20.1 spoke to the utmost
good faith and the highest degree of integrity that directors should exercise . The Court
finds that Moors and Hendrika acted accordingly as far as this ground of alleged
delinquency is concerned . The credible evidence suggests that Dreyer and Zondagh
did not. Neither did Moors nor Hendrika contravene any of the statutory provisions
identified by the Respondents in the Act, certainly not anywhere the threshold that the
Respondents had to surmount to prove delinquency.

Investec

[47] Under this ground, the Respondents alleged that Moors instructed Investec not
to release funds from VC’s credit facility at the end of September 2024. Zondagh is the
sole signatory of this account. The interest payable on this account is paid from the
FNB account. In August 2024, there were insufficient funds in the FNB account . Moors
sent an email to Dreyer and Zondagh expressing Investec’s concerns about the
management of interest repayments. Zondagh and Moors formulated a process to deal
with the situation. In September 2024 , Hendrika negotiated for VC to pay R900 000 to
Hopewell from the Investec facility. Zondagh instructed Investec to process the
payment. Moors had previously instructed them not to release the funds , and payment
was declined .

[48] Moors , in his answer, referred to a reserve fund of R500,000 in the Investec
facility designated for specific purposes and asserted that any access to the fund would
require prior consultation with him. He would lead any engagement with Investec on
behalf of VC. In late September, Investec alerted Moors that Dreyer and Zondagh
requested access to the fund , thereby bypass ing him. He was duty-bound to inform
Investec that VS did not hold the equity in VInc . The latter revelation posed a serious
risk to the bank’s po sition. Moors disputed the allegation that there was inadequate
communication with Hopewell . He asserted that a standard payment plan allowed VS to
settle its account between the 31st and the 7th of each month. The account could not
be paid in full by 7 October 2024. Both he and Hendrika actively managed the situation ,
and Hopewell was kept fully informed. Moors denied that he had b locked the Investec
account or instructed the bank to withhold any payment . He confirmed on 11 October
2024 to Investec that the funds should be released due to operational requirements. He
contended further that the correspondence submitted by the Respondents is selective
and misleading . The insinuation that a registered financial institution acted unlawfully or
beyond its mandate based on an instruction from him was false. He had confirmed the
release of the funds with the bank on 11 October 2024 (one day after the meeting when
Dreyer and Zondagh indicated tha t they owned VInc ). The latter contradict ed the
suggestion that he interfered with the facility and confirmed his ongoing management of
the relationship with Investec .

[49] Moors contended that Dreyer continue d to mischaracterise legitimate
management involvement to protect VC and its banking relationship as an obstruction.
Moors' action was taken to protect the integrity of the facility and to ensure compliance
with the terms agreed with Investec. He did not is sue instructions to Investec, but
alerted the bank to risks that required resolution by all directors. Investec responded by
demanding unanimous director consent.

[50] In reply, Dreyer characterised the content of Moors' answer as the fifth defence
raised by Moors . Moors approached the bank without first raising the matter with the
board. Dreyer d id not address why he and Zondagh approached the bank and sought
access to the reserve fund in late September. Dreyer refers to paragraph 64.1 of the
founding affidavit in the interdict application to contend that Moors only learnt that VS
did not own VInc on 10 October 2024 , after Investec had frozen the funds. He does not
refer to paragraph 42 of the founding affidavit in that application , where Moors states
that it began to emerge in July 2024 that Dreyer and Zondagh had misrepresented VS’s
interest in , and ownership of Cali Buntu. On 2 September 2024, Dreyer and Zondagh
explained the enquiry fro m the auditors, stating tha t they established an American
company to handle the transaction involving the purchase of Cali Buntu. This
explanation , which was copied to Moors, had a reassuring tone to it about the enquiry
raised by the auditors . Now fast forward to the meeting of 10 October 2024, which was
attached to the Respondents' answering affidavit. The issue of the ownership of VInc
was raised by Dreyer , who contended that the US entry ha d no bearing on VS’s annual
financial statements (AFS) , other than a note that the South African business is in the
process of procuring the US business. Moors asked Dreyer the pointed question: ‘The
South African business does not own the US business ?’ Dreyer responded that he and
Zondagh owned the US busine ss, which is called VInc. The US business cannot be
reflected in a South African AFS. Moors replied that when they invested in the business ,
the last five years' financials stated that Cali Buntu is 50% owned by VS. It was a
material issue.

[51] Moors submitted that Investec acted on its own accord in response to the
uncertainty surrounding the board’s authority, particularly considering the escalating
shareholder dispute. Investec suspended further disbursements from the reserve fund
pending conf irmation that the VS board was properly constituted and acting with
authority. It was neither alleged nor explained how Moors could have compelled
Investec, a registered and regulated financial institution with its compliance obligations,
to act in a way o f his choosing. The bank’s actions were prompted by its investigations
and uncertainty, not any instruction from him. Moors contended that t he
counterapplication was a retaliatory response to the two other applications that laid bare
Dreyer’s and Zondagh’s unlawful conduct and the grave financial distress afflicting VS
and VC. Rather than seeking legitimate relief, the counterapplication was a tactical
manoeuvre to distract from the real issues and intimidate through the spectre of
reputational harm and personal consequences .

[52] Moors asserted that h e was contacted by Investec when Dreyer and Zondagh
tried to access the reserve fund. He felt duty-bound to inform the bank that there were
certain ownership issues relating to the US business that remained unresolved . He
denied instructing the bank to suspend VC’s account. The Respondents assert that
Moors acted without board or shareholder approval and in contravention of the
established process for managing interest payments on the I nvestec facility. His
unilateral actions not only disrupted internal procedures but also jeopardised the
company’s ongoing relationship with Hopewell. Moors' conduct was either a deliberate
or grossly negligent contravention of his fiduciary duties and role as a non -executive
director. As for the Investec issue, Moors' account must prevail.

[53] As Moors' answer indicates that he did not instruct the bank or make any contact
with the bank, and that it was Investec who contacted him, there is no basis for the
Court to find that he acted in contravention of the statutory or shareholder duties
identified . This means that the Respondents have not been able to establish
delinquency relating to this ground.

Business Rescue

[54] On the alleged delinquency relating to manufactured claims against VS to
institute the business rescue application , the case was largely premised upon the
subordination agreements with FNB. Dreyer asserted that Moors endorsed the
commitments with the FNB. The agreement prohibited a demand for or acceptance of
repayment of the whole or any part of the loan owing to VS , or to commence business
rescue of VS. The trusts represented by Moors issued formal demands under s 345 of
the Act. The total amount of R14 150 000 was immediately owing, payable and due.
The demands were aimed at precipitating a rescue operation under false pretences.
The Respondents’ attorneys responded, stating that the loans were not due. On 23
January, the Trust's attorneys replied. They denied any subordination of the loans to
FNB. On 5 February, Moors and the Trust launched the business rescue application.
These contentions were predicated on palpably dishonest statements to the effect that
Moors and the Trust s’ shareholder loans were due and payable. Moors was dishonest
with the Court and perjured himself in order to advance his and the Trust's interests to
the detriment of VC and VS.

[55] Moors' answer asserted that t he business rescue application was precipitated by
the breakdown in the management and governance of VS, the unlawful exclusion of
Hendrika and him from the board and a marked deterioration in the company’s financial
position. Moors contended that t he Respondents c ould not undermine the business
rescue process through a collateral attack in this counterapplicatio n based on
speculative and unfounded conspiracy theories manufactured to deflect attention from
the facts. The Respondents denied under oath that the DCMF Trust, the AMF Trust or
Moors had advanced any loans to VS or VC . This was corrected in their supplem entary
answering affidavit, where they acknowledg ed that loans in excess of R15 million had
been advanced to VS and VC. Moors contended that the Respondents now sought to
acquire the same loans against payment at face value through the relief sought in the
counterapplication.

[56] The Court need not look further at the facts informing this ground of alleged
delinquency. A quick perusal of the business rescue application refers to the legal
exchanges that occurred relating to the subordination agreement . The content deals
with the s345 demands and the subordinate agreement as history . The motivation for
the business rescue application , which begins at paragraph 47 of the Moors' founding
affidavit , is premise d upon the financial distress of the c ompany , evidenced by its
financials . No further mention of the s 345 demands was made in that affidavit . The only
debt specifically referred to was that of an unpaid statement of the Chartered
Accountant . The application was premised upon s128(1) (f) (ii) and the just and
equitable basis for seeking business rescue.

[57] In the circumstances, there is no credible factual basis for alleging delinquency
on the part of Moors. The company was insolvent on the fi nancials and on the
assessment made by Gray.

The strategy to exclude Dreyer and Zondagh from the business

[58] As for the strategy to exclude Dreyer and Zondagh from the business, the Court
has considered the context. Since July 2024 , the two material issues that led to the
disputes between the directors were the unlawful withdrawals and the uncertainty about
the ownership of VInc, the entity that owned Cali Buntu. The Court cannot understand
why it would be unforeseeable in these ci rcumstances for other directors to strive to
remove the offending directors.

[59] Dreyer allege d that the business rescue application was contrived for the ulterior
purpose of facilitating a hos tile takeover of the Veldskoen Group by Moors and the
Trusts. He allege d that Hendrika had colluded with Moors to engineer this process . By
doing this, they were subverting Dreyer’s and Zondagh’s rightful governance and
shareholding. The complaint against Moors and Hendrika is that by misrepresenting the
comp any’s financial position and manufacturing a rescue scenario , they have abrogated
their fiduciary duties and abused their powers to oppress and unfairly prejudice the
interests of the Respondents.

[60] Moors considered the se a llegations to be absurd and unsubstantiated. Moors
denied any collusion or conspiracy, and no evidence has been placed before the Court
to support it. The business rescue application was initiated because VS is in severe
financial distress. Investec and FNB had placed the company in breach and reserved
their rights to call up the facilities if the breach had not been cured. The legitimacy of
Dreyer’s and Zondagh’s leadership was contested. Moors states that before August
2024, he had little engagement with Hendrika. Any su ggestion of collusion was false.
The emails relied upon by the Respondents disclose no attempt to mislead the Court or
affected persons, nor any suggestion of falsified financials. A business rescue
application must establish a reasonable prospect of rescu ing the company. Neither is
there anything untoward in converting debt into equity. T here aren’t many ways of
restoring a company to solvency. Further capital can be injected, new debt raised , or
existing debt converted into equity to reduce liabilities. The alignment of the business
rescue practitioner to a plan proposed by the Applicants is not evidence of a conspiracy
or a takeover. It is a necessary element of the application. The nominee must agree to
the appointment and therefore be supportive of the proposed restructuring from the
outset. As for proposing a recapitalisation threshold, the emails reflect ed a scenario that
is being modelled, not a fixed or exclusive plan. Under Chapter 6 of the Act, Dreyer and
Zondagh remain directors. They are entitled to table an alternative plan, provid e funding
and vote on it. Even if Moors believed that Dreyer and Zondagh could not meet the
figure he proposed, that d id not prevent them from participating. What matters is
whether the requirements for rescue under s131 are met

[61] Moors denie d that his conduct constitute d a breach of the statutory provisions
raised by the Respondents. The essence of the Respondents’ complaint appears to be
that the Applicants wish to exit a dysfunctional relationship and pursue a path without
Dreyer and Zondagh. There is nothing unlawful in that. Dreyer and Zondagh want the
same outcome. No evidence has been placed before the Court that the Applicants
acted dishonestly, oppressively or without regard for the best interests of the company.

[62] The Respondents have specifically failed to address any of the answers in their
reply, apart from some oblique mention of them in the ir construction of the alleged
defences raised by the Applicants. There is no merit in this ground of alleged
delinquency.

[63] Moors concludes his founding affidavit by contending that the counterapplication
is an abuse of the Court’s process , and seeks final, far-reaching orders in motion
proceedings plagued with foreseeable and material disputes of fact. The Respondents
argued that th e objective facts demonstrate a pattern of serious misconduct by Moors
and Hendrika. The Court is unable to discern the pattern complained of or the objective
evidence that supports this contention, apart from conjecture , speculation , and
contrived retalia tory inferences drawn from the facts as presented.14 Moors and
Hendrika were acting in the best interests of VS and nothing less. The test for
determining whether a director acts in the best interests of a company is subjective, i.e.,
based on the director’s rational belief that is exercised for a proper purpose. The test for
rationality and proper purpose is objective. Moors and Hendrika were informed of the
issues either directly or indirectly . They believed that their actions were in the best
interests of the company . The issues over the transfer of funds and uncertainty over the
ownership of the US business indicated that there was a rational basis for their actions.
They were directors , and Hendrika occupied a management role . They were
empowered to act as they did, and the Court therefore finds that they acted in the best
interests of the company.15 They to ok reasonably diligent steps when they learnt of the
transfer of funds from, and the uncertainty over the ownership of Cali Buntu. The Court
need not look at s163 for the me asures directed at relief from oppressive , prejudicial, or
abusive conduct towards the separate juristic personality of the company.16

[64] It follows that the application to declare Moors and Hendrika delinquent directors
must fail. The Applicants sought an adverse costs order against the Third, Fourth, and
Fifth Respondents . The Court agrees that a punitive costs order is warranted against
those Respondents and shall order accordingly.

14 Knoop NO and Others v Gupta and Others 2021(3) SA 88 (SCA) at para 166, Radebe and
Others v Eastern Transvaal Development Board 1988(2) SA 785 (A) at 793 C -E, Makhala v
Director of Public Prosecutions , Western Cape 2025 (1) SACR 275 (CC)
15 Visser Sitrus (Pty) Ltd v Goede Hoop Sitrus (Pty) Ltd and Others 2014 (5) SA 179 (WCC) at paras
74-81
16 Louw and Others v Nel 2011 (2) SA 172 SCA at 186 F

THE BUSINESS RESCUE APPLICATION

[65] The Applicants in this application are the DCMF Trust and the AMF Trust. They
are affected persons under s128 (1)(a) and 131(1) of the Act. The Respondents are VS,
VC, Zondagh, Dreyer, and the Companies and Intellectual Properties Commission.17
The latter has not participated in this application. Moors deposed to the founding
affidavit and Dreyer to the answering affidavits . Michael Gray (Gray) and Johan
Potgieter (Potgieter) , the financial experts, feature prominently in this application. They
provided con firmatory affidavits.

SUBORDINATION OF LOANS AND THE PROHIBITORY CLAUSE

[66] There is a preliminary issue that the Court must determine. The Respondents
rely on a clause in a tripartite subordination agreement, prohibiting the Applicants from
initiating business rescue proceedings against the company until the FNB’s claims are
discharged . The Respondents accuse d the Applicants of being devious by failing to
disclose the subordination of their loans in favour of the First National Bank, before
relying upon it in demanding repayment under s345 of the Act. The Respondents
invoked the clause against the Applicants. While the Applicants concede d belatedly the
existence of the agreement, they contend ed that the clause in question is either pro non
scripto or contrary to public policy, as it seeks to oust the statutory right of an affected
person to approach the Court under section 131 of the Act.

[67] The Court is mindful of the foundational principle of pacta sunt servanda , that
agreements freely and voluntarily entered into must be honoured. However, this
principle, while central to contractual certainty, is not absolute. The Apex Court affirmed
that enforcement of contractual terms must accord with public policy, which is infused
with constitutional values such as fairness and justice . In the present matter, the clause
purporting to prohibit the Applicants from initiating business rescue proceedings seeks
to oust a statutory right conferred by section 131(1) of the Act. Enforcing such a clause

17 The abbreviated citations of the parties are retained for this application.
would undermine the legislative purpose of Chapter 6 and unjustifiably limit the
Applicants’ access to a remedial process designed to serve the broader public interest.

[68] In determining whether a contractual clause offends public policy, a two-stage
test as articulated by the Apex Court is applied .18 The first stage considers whether the
clause was agreed to freely and voluntarily by parties of equal bargaining strength.
While there is no evidence of coercion, the inquiry does not end there. The second
stage requires the Court to assess whether enforcement of the clau se, in the present
circumstances, would be unreasonable or unfair. The Applicants are “affected persons”
under section 128(1)(a) of the Act and are entitled, as a matter of statutory right, to
approach the Court under section 131(1). The tripartite agreeme nt, in the absence of
clear language, defined remedies , or objections from the bank , would unjustifiably limit
access to a statutory remedy designed to serve the public interest.

[69] The clause, lacking precise definition and enforceable parameters, is vague and
overbroad. The Respondents sought to invoke the clause on behalf of VS, the
borrower. The Respondents do not have the requisite standing to enforce a restraint
that was neither intended for their exclusive benefit nor accompanied by any express
enforc ement mechanism in their favour. The clause, on its face, is directed at regulating
the conduct of the creditor with the bank and the borrower and does not confer a right of
objection upon the borrower itself. Moreover, the bank, having been duly notified of the
application, has elected not to oppose it.

[70] The Respondents relied on a recent judgment of th is division in which the Court
declined to pronounce on the validity of a prohibition clause in a subordination
agreement, citing the absence of key parties whose rights would be prejudicially
affected.19 The prohibition clause was raised as a point in limine . That case is
distinguishable. In the present matter, the bank , an original party to the tripartite
agreement and the intended beneficiary of the clause , was duly notified of these
proceedings and elected not to participate. Unlike the absent parties in the case cited ,
the bank had a full opportunity to assert its rights and chose not to do so. The audi

18 Barkhuizen v Napier 2007 (5) SA 323 (CC)
19 Ilitha Group Holdings Proprietary Limited v Sunrise Energy Proprietary Limited and Others
(19854/2022) [2023] ZAWCHC 331 (14 December 2023) at paras 17-22
alteram partem principle has therefore been s atisfied. The Court is entitled to draw an
inference from the bank’s silence and to conclude that no prejudice arises from
adjudicating the enforceability of the clause. Accordingly, the procedural concerns that
animated the earlier decision are not presen t here, and the Applicants’ challenge to the
clause may properly be entertained. In the premises, there was no need to join the
bank , and the Respondents did not invoke any objection under the Court rules to
demand joinder. T he Respondents’ reliance on the clause is misplaced.

The Application

[71] The application is an urgent application to place VS under supervision , and that
business rescue proceedings commence in the manner contemplated under s131(4) of
the Companies Act . Under s131(4), the Court has to be satisfied, after considering the
application, that the company is financially distressed , the company has failed to pay
over any amount in terms of an obligation under or in terms of a public regulation or
contract , concerning employment related matters, or it is otherwise just and equitable to
do so for financial reasons , and that there is a reasonable prospect of rescuing the
company. The Applicants have nominated an interim Business Rescue Practitioner
under s131(5 ) to oversee the rescue process .

[72] A financially distressed company , in simple terms , is a company that is struggling
to pay its bills and is at risk of going under. It has liquidity trouble in that it is unlikely to
pay its debts as they fall due in the next six months , or it has balance sheet insolvency,
in that it is likely to become insolvent within the next six months , meaning its liabilities
will exceed its assets.20 If a company is constantly borrowing more just to stay afloat , it
is in financial distress.

[73] The Applicants assert that VS is in severe financial distress and is factually and
commercially insolvent . The application was brought on an urgent basis on 5 February
2025 but was only heard on 3 and 4 June 2025 . The financial distress of a company is
assessed at the time the application is heard , meaning that the financial information

20 S128(1)(f) defines financially distressed to mean that is reasonably unlikely that the company will
be able to pay all of its debts as they become due and payable within the immediately ensuing
six months or it appears to be reasonably likely that the company will become insolvent within the
immediately ensuing six months .
relating to VS may or may not have changed since February 2025 .21 Dreyer has
capitalised on this aspect , suggesting that the Applicant’ s prediction that the company
would be insolvent within two to three months had not come to fruition. The cynicism is
not grounded in the evidence. Dreyer was at pains to demonstrate in his affidavits that
he and Zondagh, with the help of Potgieter , have instituted a n intensive business
strategy to rescue the company . The Applicant’s case for business rescue included
both the legs of financial distress as well as reliance on the just and equitable grounds.
The Court understands the Applican ts’ overzealous prediction that VS would be unable
to pay its debts in the normal course within a two to three -month period . However, they
had already made out a convincing case that VS was in balance sheet insolvency.
Dreyer’s cynicism about Gray and Moors' prediction raises the question of why six
months for both commercial and factual insolvency was included in the definition. Why
was it not seven months or one year ?

[74] Financial distress encapsulates two options in its definition. The first relates to
whether it appears to be reasonably unlikely that the company would be able to pay all
its debts as they become due and payable within the immediately ensuing six months,
or it appears to be reasonably li kely that the company will become insolvent within the
immediately ensuing six months.

[75] The application was based on four grounds, namely financial distress and
insolvency, mismanagement and governance failures, creditor protection and
avoidance of liquid ation, and reasonable prospects of recovery.

[76] The Applicants argued that VS was both commercially and factually insolvent.
Moor s asked Gray to conduct a detailed analysis of VS ’s solvency and liquidity using
management accounts. The report filed as an annexure to the founding affidavit was
based on information as at 31 December 2024 and obtained from the company’s Xero
accounting system. Gray deposed to an affidavit confirming the conten t of Moors'
affidavit a s it related to him. He states that based on the information attributed to him in
the founding affidavit and his assessment of the financial records he compiled, VS was
factually and commercially insolvent as of December 2024.

21 Diener N.O. v Minister of Justice (926/2016) [2017] ZASCA 180 (1 December 2017)

[77] Moors set out the extent of VS’s financial distress , referring to Gray’s report .
Moors recommended Grays appointment following persistent weaknesses in financial
controls, governance , and reporting structures. Concerns had been raised about the
company’s finance s and accounting. The financial statements could not be finalised due
to missing funds and accounting irregularities . Gray identified serious liquidity
constraints, uncollectible debts and misrepresentations in financial reporting .

[78] The Respondents criticised Moors for failing to disclose when Gray was
appointed, i.e., 4 August 2024. They referred to his engagement letter , which identified
a wide range of accounting, internal control, governance, and financial planning issues,
especia lly in relation to the USA and UK entities. Gray’s stated goal was to provide
mentoring of the CFO to address finance function weaknesses , improve financial
reporting, and ultimately financial results. Dreyer states that every issue identified in
Grays letter was Hendrika’s responsibility. They are the same issues that the Applicants
allege d require rehabilitation under business rescue proc eedings.

[79] Moors referred to an email from Gray dated 20 January 2025. Gray observed
that the financial results of 2024 revealed a significant deterioration in the financial
performance and financial position of the company. Sales had declined by 22%, The
company had a net loss of R3 million for two consecutive years. The cash position had
declined from a sur plus of R1 million in December 2023 to minus R 5 million in
December 2024. Over three years, there w ere combined operatin g and investing cash
outflows of R20 million mainly funding losses incurred by Cali Buntu and VUK , financed
by an equivalent increase in debt. There was declining sales and escalating losses. He
warned that the company’s solvency and liquidity were in seri ous doubt.

[80] He identified several critical issues regarding the company’s continued viability,
including the recoverability of debtors, accuracy of stock valuation, cash constraints and
intercompany balances. Cali Buntu and Rove & Saddle (the Australian company selling
the products), owed over R10 million as debtors for stock with amounts outstanding for
over one year . Cali Buntu and V UK owed around R 5 million in intercompany loans
which funded operating expenses . These debts appear ed unlikely to be recoverable at
all or anytime soon. Numerous small debtor accounts, both receivables and credit
balances, appear ed to be incorrect and m ight require significant write offs. The stock
barely turn ed over twice a year when the industry standard is 5 -6 times yearly.
Incomplete creditor balances raised the possibility of unrecorded liabilities. The
business ha d no available cash, and all credit lines and overdraft facilities were
stretched to their limits. Gray warned that the company may have a shortfall of assets
over liabilities of over R15 million, with limited prospects of raising further debt due to its
recent financial performance and financial position . He suggested that the directors
seek equity investment to shore up the shortfalls.

[81] Dreyer’s response was that Gray had obtained these figures from unvetted and
unsigned management account s. Dreyer referred to their attorney’s letter cautioning
Moors in his reliance on allegations by Gray and both of them on their reliance on
unvetted management accounts. The Respondents relied on Potgieter for their financial
information concerning VS.

Potgieter’s Affidavits

[82] Potgieter’s affidavit confirming reference s to him in Dreyer’s answering affidavit
is dated 1 7 February 2025. He is a r egistered Chartered Accountant practising as such
since 2016. He advises Veldskoen as their external CFO. He asserted that VS is not
financially distressed. He projected that the company will become profitable in the
2025/2026 financial year. He contend ed that the Applicants ha d misrepresented VS’s
financial position. Moors, Gray, and Hendrika have either intentionally or unintentionally
undermined and understated the company’s standing. The Applicants unexpectedly
recalled loans not immediately due while simultaneously advocating for increased
shareholder loans and br oad asset write -downs under the pretence of a ‘turnaround
plan’. His initial analysis of the company’s information suggested an attempt at internal
sabotage.

[83] Potgieter explained that t he Applicants loans ha d always lacked a fixed
repayment schedule and functioned similarly to ‘quasi equity ’, a common treatment for
shareholder loans. He allege d that the Applicants inten tions included the cancellation of
the FNB loans to VS . The view is supported by emails excha nged between Moors,
Gray, Hendrika and their legal team discussing the creation of a financial scenario to
justify their business rescue application. This was a reference to a legal strategy email
sent by Moors to Hendrika ’s email address in January 2025 a t VS. Dreyer and Zondagh
intercepted the email.

[84] Potgieter conducted a solvency and liquidity analysis of VS based on the
company’s balance sheet as of 31 January 2025. Gray’s assessment of the company’s
negative equity of R21.3 million include d R16.3 million for loan and debtor write -offs
and a projected loss of R2million for January and February 2025. Potgieter viewed the
debtor write -offs as being unwarranted.

[85] Potgieter stated that if the Applicant’s loans are subordinated and treated as
‘quasi-equity ’, the group has a positive equity of R7 058 608, and VS has a positive
equity of R13 422 138.59 which indicated that it is not insolvent. He had not assessed
the value of VS's goodwill but expected it to increase its equity position. The account s
payable balance for VS ha d decreased over the past three months, with no outstanding
debts. The company ha d arranged payment plans with all creditors and remain ed a
going concern. All company debts were being managed and paid according to agreed
payment plans with only minor aged debtors due to disputes. Th e latter appeared from
the aged payables summary in the management accounts as of 14 February 2025.
Potgieter considered the Applicants contention that VS undergo business rescue to be
motivated by pers onal differences and ambition rather than genuine concern for VS ’s
welfare. He performed a three -year profit and loss forecast. It demonstrate d a strong
potential for sustained profitability. VS is expected to experience sustained revenue
growth, stable gross profit margins, and improving net profit margins over the forecast
period.

[86] Potgieter dismissed Moors allegations about auditors’ refusal to sign off on the
2024 financial statements due to concerns about trade debtors and loans to V UK and
Cali Buntu as being untrue. Potgieter lamented Moors failure to confirm his allegation
from the auditors. Potgieter stated that the auditor’s failure to finalise the 2024 financial
statements was due to incomplete accounting. The draft financial statements are more
accurate than the company’s management accounts , it having had the benefit of
external scrutiny and analysis.

[87] Potgieter responded to Gray ’s alleged suggest ion that Cali Buntu be liquidated.
He regard ed the concern s about the ownership of Cali Buntu as a trivial matter.
Potgieter contacted the US Accountant who confirmed that VInc own ed 100% of the
shares in Cali Buntu . No shares in VInc have ever been issued . As far back as July
2023, Zondagh requested the shares be issued in VS’s name . The shares have not
been issued because th e accounting information for Cali Buntu and VInc was not up to
date. The final information has been submitted to Iridium and is being processed and
should be completed imminently. Once Iridium has this done, the state of Delaware ,
USA, will be requested to issue shares reflecting 100% ownership of VInc by VS. On 4
February 2025, Potgieter prepared an opinion on th e way Cali Buntu ought to be
recognised in the AFS. VInc is a 100% subsidiary of VS and should be recorded as
such .22 When Cali Buntu was 50% owned , it was classified as a joint venture and thus
correctly recorded as such in the financial statements.

[88] The aged debtors amounted to R13.67 million. Potgieter referred to Gray ’s
suggest ion that , as the amounts owed to VS by Cali Buntu, V UK and Rove & Saddle
are excessively overdue , they should be written off. Potgieter considered the
suggestion to be ill-founded as it would deprive the company of substantial income.
Gray treated Cali Buntu as ordinary third-party debtors , which they are not. Their status
as entities within the group is significant both from an accounting perspective and from
the perspective of the group's growth strategy. Cali Buntu’s debt amounting to R10
million is the most significant part of the debtor balance. The decision to purchase the
remaining 50% in Cali Buntu was made knowing that Cali Buntu had been a loss
leader. Cali Bunt u was purchased even though it was running at a loss and had existing
debt. Turning this around and establishing a market in the US required stock, capital,
effort and cash flow. VS loaned R4.77 million for the purchase price of the remaining 50
% of shares. The remaining debt is comprised predominantly of stock that was supplied
on credit, intended to fund market entry. While Cali Buntu is a debtor in invoice terms ,
the loan is a credit, which offsets the balance by R2.8 million, taking the closing balance
to R7 .22 million. What the latter means is that Cali Buntu owed VS R10 077 107.23, VS
also gave Cali Buntu a loan of R2 856 469.30, Cali Buntu’s net debt is R7 220 637.93.


22 Dreyer expressed the contrary view on 10 October 2024 .
[89] Potgieter was of the view that writing off Cali Buntu’s loan would be reckless. He
says that whilst the overall balance of Cali Buntu’s loan has increased, there have been
significant and frequent repayments which will likely increase as the business grows .
The Shopify loan facility is repaid by automatic deduction of 17% from all US sales.
Potgieter states that when the facility becomes available, it will be paid by Cali Buntu to
VS, applied to Cali Buntu’s loan account and provide cash flow. The decision to
suspend stock led to a loss of approximately $ 240,000 in sales. Shopify would have
retained approximately $ 40 000, which would have paid the existing loan and made the
next facility available immediately. The increased turnover would have increased the
next facility to approximately $230 000. This would have been paid to VS, settli ng a
large part of the Cali Buntu loan sooner and providing more working capital. The loss of
sales in Cali Buntu produced an equivalent loss of turnover for VS on the stock it
supplied , estimated at about R440 000. He allege d that the decision to stop sto ck was
either motivated by malice or demonstrates a deep lack of understanding of the
business.

[90] The loan to V UK is also likely to be recovered. In July 2024, an amount of R468
986 was paid, leaving an outstanding amount of R128 543 . The suggestion th at this
loan is written off is irrational. Rove and Saddle of Australia owe R700 000, but these
invoices were issued for consignment stock, i.e., stock not yet sold. Hendrika
authorised the shipment on these terms.

[91] The balance of the ageing debtors amoun ts to R2 644 241 and comprises
ordinary external third parties in nominal individual amounts. Gray introduce d the
Nagging Panda system , which monitors and controls aged debt by automatically
sending invoices, statements and demands. Gray did not ensure tha t it worked
properly, but that has now been rectified. Potgieter developed a business strategy for
2026, which forecasts a saving or profits between R7.1 million and R9.3 million, and the
company trading profitably.

[92] Potgieter addressed key points relatin g to debtors' collections and sales
discounts . He criticised Gray’s view that Dreyer shut down the Nagging Panda system
when it began revealing glaring deficiencies in their accounting. He says it is a
misrepresentation. Gray did not implement the system c orrectly. Dreyer shut the system
down until it had been properly integrated into the company systems. There was an
underestimation of sales by R1 million for th at period .23

[93] As far as creditor and supplier arrangements were concerned, for the period 31
October 2024 and 9 February 2025, VS ’s aged payables were reduced from R9 241
million to R6.98 million. These include d payment plans with the biggest non -stock
suppliers like Skynet and FedEx . R1.3 million was paid on their outstanding accounts.
The payment plans were in force until the balance was cleared within two months.
There is limited flexibility to free up working capital with Hopewell Footwear. On 9
February , they accounted for 73% of the total supplier balance. The Applicants sought
to negotiate a 60-day payment plan with Hopewell. Potgieter criticise d this as a lack of
understanding of the business. Hopewell ha d made it clear that they would not supply
VS on 60-day terms. Hopewell has offered a 2% rebate if payment is made within 30
days of the statement. The company intend s to achieve this by August 2025. Based on
the purchase history of the last 12 months, this rebate would have resulted in a discount
of about R382 000.

[94] A new partnership with TUNL is a key to the company’s margin s improv ing in
opening markets in the US and the rest of the world. It allows for a cash -on-demand
logistics chain for international sales. The purchase price is paid before the product is
released. Hendrika allegedly ignored TUNL’s previous approach to her .

[95] Potgieter identified obsolete or slow-moving stock of about R1.7 million. He
intend ed to discount this through promotions and sales. Potgieter criticise d Moors and
Gray ’s plan to optimise inventory turnover by writing off obsolete stock. The deep
discounting they observed was of obsolete stock , which would generate R800 000 if
sold this way. Potgieter criticised the alleged shrinking margins in December as a
fiction. He contended that s ales always taper after November. His 12-month profit and
loss analysis indicate d a normal decline.

[96] Potgieter identified new clients like Agrimark , the Veldskoen Golf range, Manners
Milano, Amazon Global, and Bifi Milano . Potgieter identified cost optimisation strategies

23 This aspect was covered in the Moors founding affidavit after Gray had identified the R1m as
incorrect capture in the accounting systems which exposed the company to possible further liability.
like changing the local courier and freight supplier , reduction in warehouse space and
rental. He expect ed a loan of $100 000 to be advanced by Shopify when the current
cycle ends. His opinion is that the company is not financially distressed. The company’s
ability to pay its creditors remains intact , and there is no indication of impending
insolvency.

Gray’s reply to Potgieter

[97] Gray began his association with the Veldskoen Group on 2 August 2024. He
identified areas of significant weakness in basic accounting, internal control,
governance, and financial planning, especially with the US and UK entities. V eldskoen
had been highly reliant on outsourced accounting and limited m anagement reporting ,
ineffective internal controls , and support of people , systems and processes. This ha d
led to delays in producing accurate and timely accounting reports and delayed audits.
This has further detrimentally affected management decisions and control .

[98] He worked with the CEO and Iridium , the company’s accountants, to get the
books of Cali Buntu and V UK up to date , as this was the main factor preventing the
finalisation of the 2024 AFS. The major issue here was the lack of input in the form o f
bank accounts and supporting evidence from Dreyer and Zondagh . The severe cash
constraints that VS was under due to unpaid loans and debts of Cali Buntu and V UK
led to the Applicants advancing a further bailout loan of R500,000 in October 2024 to
meet a missed payment to a major shoe supplier.24 It became apparent to him that Cali
Buntu and V UK were insolvent and unable to repay more than R18 million owed by
them to VS. In December 2024, the Nagging Panda debtor’s management sy stem was
integrated with the Xero accounting system.25

[99] Gray raised the financial distress and potential insolvency of the companies in
the Veldskoen group from about December 2024 . He repeated this alarm in January
2025. Gray referred to s128(1)(f) of th e Companies Act in his analysis of the extent of
the company’s financial distress . Gray assessed VS’s financial position against the

24 This bailout was before the Black November sales that the Respondents claim was sabotaged
by the Applicants .
25 The problem prior to December 2024 arose from a lack of integration between the two systems.
International Financial Reporting Standards (IFRS) for small to medium -sized (SME)
enterprises (IFRS for SME ’s). He critici sed Potgieter for using the more onerous IFRS
standard applied to larger companies . Gray explained that IFRS does not define
financial distress but requires disclosure of material uncertainties that cast significant
doubt on the entity’s ability to continu e operating normally , e.g., an inability to service
debts, recurring losses, negative operating cashflows. In these circumstances, the
entity must consider whether the financial statements should still be prepared on a
going -concern basis or another more appropriate basis (e.g., liquidation ).

[100] VS’s accumulated losses to 28 February 2024 were over R4 million. Gray
expected the same loss for the 2025 financial year. Cash flow had been negative, and
VS was only able to continue trading due to the funds introduced directly by the
Applicants or indirectly by Investec and FNB , both of which are guaranteed or secured
by the Applicants. VS has only been able to continue trading under negative cash flow
circumstances through the introduction of debt in the form of Applicant’s loans. The
FNB and Investec funds have flown out of VS and the country in the form of loans and
current trading indebtedness to offshore entities, Cali Buntu and V UK. The entities
have been under the total control of Dreyer and Zondagh. It is telling that the entities
have not had their accounting records maintained, and , according to their last
management records produced in May 2024 , were hopelessly insolvent and heavily
indebted not only to VS but also to third parties such as Shopify.

[101] The major asset on the balance sheets of VS is accounts receivable and loans to
these group entities, which are trading at losses, insolvent a nd unable to pay for the
loans and stock sold to them. They have not paid and are incapable of paying. He
criticise d Potgieter’s belief that R194 000 in receipts on more than R10 million in trade
debt owing as accounts receivable by Cali Buntu in VS’s book s was a significant
payment, indicating its ability to pay. Potgieter said that the payment came from
borrowing from Shopify , and when the next Shopify amount is borrowed ($200k) , this
will then be used to pay off a significant amount of VS’s debt. Potgieter seems oblivious
to the fact that these loans (plus interest) will put Cali Buntu further into financial
distress. Potgieter project ed profitability in the 2025/2026 financial year. Yet his
annexures to his affidavit indicate a company that has be en incurring losses for 4 years
and, on the face of it , insolven cy (liabilities exceeding assets). Before considering
whether assets are fairly valued, he had to consider whether they have negative equity.

[102] Given that over R14 million of debt cannot be repaid by the ‘group’ entities ,
which are themselves insolvent, Potgieter wants one to believe that Dreyer and
Zondagh will achieve profits. They are the ones who have largely overseen the
disastrous results in the US , UK, and Australian markets over the la st four years . It is
inconceivable how they will now turn the business of the ‘group’ and the company
around in the next twelve months.

[103] Gray referred to Potgieter ’s attempt at propping up VS using concepts of ‘quasi -
equity ’, goodwill, consignment of stocks, and loans , as investments in ‘group’ entities.
Gray believes that Potgieter is on fragile territory on each of these grounds. IFRS for
SMEs might classify subordinated shareholder loans as either liability or equity,
depending on specific criteria. The key lies in evaluating the ‘quasi -equity ’ concept.
Subordination does not inherently convert a loan into equity under IFRS for SMEs . The
classification hinges on a contractual obligation to repay the principal , which defines it
as a lia bility. IFRS for SME’s typically treats ‘quasi -equity’ as a l iability unless there is
no contractual obligation to repay. The latter is not the case for either VC or the loans
from the Applicants. Classification as equity is rare. While the loans from the Applicants
may be subordinated in favour of FNB as additional security for the VS -FNB overdraft
facility, the debt obligation to the Applicants still exists . The liability would no longer be
subordinated, once , or rather if or when, the FNB facility was discharged . If the
company were to be liquidated for more than the FNB loan, the Applicant’s loans would
stand before the equity in VS and the g roup in claims against the liquidated assets.

[104] From an accounting perspective, the subordination does not create equity ; it
merely defers or back -ranks the debt claim in preference of the FNB first. Even FNB
would not count it as equity when assessing their risk. Under IFRS for SMEs , no
separate category is formally called ‘quasi -equity’. Each financial instru ment is
classifie d as equity or liability based on whether there is a contractual obligation to
deliver cash or another financial asset. Subordination alone generally does not
transform a loan into equity. Compound financial instruments refer to a subordin ated
loan that has a convertible feature or has other embedded derivatives creating separate
components. IFRS for SMEs may treat it as a compound financial instrument (part
liability, part equity). This requires splitting out the equity component if the te rms
explicitly allow conversion into a fixed number of shares for a fixed amount of cash.
Pure subordination , where the debt is repaid after all other creditors are settled , does
not by itself meet the test for an equity component. ‘Quasi -equity ’ cannot apply in the
instance of the Applicant’s loans. ‘Quasi -equity ’ is more of a business term indicating
that a debt instrument is so deeply subordinated or has such flexible repayment terms
that it behaves more like equity. Banks and investors may label these instruments
‘mezzanine’ or ‘quasi equity’, but IFRS for SMEs still requires their classification as
liability or equity based on legal or contractual terms.

[105] Gray explained that t he determination of solvenc y and liquidity rests on an
interpretation of the financial statements. Subordination clauses make the loan riskier
for the lender, yet they do not, on their own, remove the contractual obligation to repay,
so classification as equity typically is not perm itted under IFRS for SMEs. Disclosure of
subordination agreements, the restrictions on payments and the relationship between
the parties help users of financial statements understand the nature of the instrument .

[106] Gray then dealt with Potgiete r’s reference to quantifying the goodwill of the
Veldskoen brand. He explained that u nder IFRS for SMEs, goodwill is initially
recognised as the amount by which the cost of the business combination exceeds the
fair value of the identifiable net assets acqu ired. It is amortised over its useful life or ten
years if the useful life cannot be reliably estimated . It is only tested for impairment if
there are indicators that it may be impaired. Detailed disclosures are required about the
amortisation period, meth od, impairment charges, and any significant judgments
involved in determining or estimating the useful life. There is no such investment shown
in the balance sheet for any investment in any business combination where the assets
are less than the acquisitio n cost and which , if there were such a case, could be
ascribed to goodwill.

[107] Potgieter’s handling of the Australian transaction with Rove & Saddle received
Gray’s attention. Potgieter stated that the stock was sent on consignment, and the
invoices were reflected as a debtor in the books. They requested a goodwill discount
and stated that the debt would be paid. Gray disagrees that the stock sent to Australia
was on consignment. As no payment was made, normal accounting principles would
provide for the debt as being unrecoverable. Gray persisted in recommending that the
amount be written off.

[108] On the Cali Buntu debt, Gray referred to Potgieter’s analysis show ing that only
R194 656.64 ha d been paid again st R10 million in debt. Gray criticised Potgieter’s view
that this payment was significant . Gray then turned to Potgieter’s view that the loan
account , which appear ed to be in credit by R2 856 469.30, should be offset against the
accounts receivable custom er debt . Gray criticised Potgieter for not considering three
factors . There was a loan account from N Akkerman of R1 119 505 that was made to
Cali Buntu to facilitate the acquisition of shares of Fun Brands. Potgieter did not
consider the $55 700 (R1 017 500 appropriated by Dreyer and Zondagh or interest
chargeable on these loans. There were intercompany loans from V UK to Cali Buntu
that are not mentioned and total over R2 million. After considering these, there is no
balance to offset against the accounts receivable customer accounts. An investment
loan of R4 901 363 should also be impaired because Cali Buntu is insolvent as per the
last management accounts by over R10 million ($500 000 ). This loan , together with the
other loans , should be impaired and written off as assets of the company having no
value.

[109] The accounts receivable customer account was also for goods shipped as sales
from VS , which under South African Reserve Bank regulations should be paid within six
months. Failing payment, the company should request SARB approval for delays in
payment. This has not been done, meaning that the debt is immediately payable.

[110] On Potgieter’s criticism of Hendrika’s decision to stop stock to the US, Gray
stated that the management accounts show that over the past three years only
R194 656.64 of the R10 271 764.07 in stock sent to Cali Buntu trickled down to VS. To
advance another R10 million to get a trickle down of R190 000 (from the Shopify
advance) is not a rational business decision.

[111] Gray holds the opinion that the write -off of the R14 259 005 on Cali Buntu is only
prudent and accords with the requirements of IFRS for S MEs. He provided a
breakdown on how he arrived at this figure. Gray criticised Potgieter further by implying
that Potgieter failed to appreciate the extent of V UK’s indebtedness to VS, namely
R3 435 845.60 , even though it appears in one of his annexures. Potgi eter only
mention ed the accounts receivable customer balance of R128 543. He fail ed to mention
that V UK is insolvent by an amount of R2 million. Gray believe d that a write -off of
R3 561 338 on VUK is prudent and in line with IFRS for SMEs.

[112] Gray referred to Potgieter ’s state ment that deep discounting only applied to
obsolete stock . Potgieter provide d no evidence to support this. Deeply discounted sales
are totally speculative and seem to be applied to all stock to raise cash as fast as
possible.

[113] Gray co ncludes that the test of solvency , then, is whether assets exceed
liabilities. Based on the balance sheet Potgieter shares in one of his annexures, the
shortfall of assets over liabilities is determined by subtracting the net assets per the
December 2024 management accounts (R2 822 341), and adding additional
impairments (write downs) per the principles of IFRS for SMEs. Gray performed the
exercise as follows: Rove & Saddle: R698 598, Cali Buntu: R14 258 006, V UK:
R3 565 390, Stock Write Downs: R1 700 000, estimated loss for January and February :
R 2 000 000. Gray estimate d that the total shortfall of assets over liabilities amount ed to
R25 144 325.

Objective Evidence

[114] The Respondents argued that the determination of whether a company is in
financial distress is a factual enquiry.26 An appli cation for business rescue must
establish the grounds for business rescue per the rules of motion proceedings , which
generally speaking , require that it must do so in its founding papers.27 The application
must be determined under the Plascon Evans Rule. Suppose disputes of fact arise on
the affidavits in motion proceedings. In that case, a final order can be granted only if the
facts averred in the applicant's affidavits, which have been a dmitted by the respondent,
together with the facts alleged by the latter, justify such an order. It may be different if

26 Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty) Ltd and
Others (609/2012) [2013] ZASCA 68; 2013 (4) SA 539 (SCA); [2013] 3 All SA 303 (SCA) (27 May
2013) (Oakdene )
27 Oakdene at para 29
the respondent’s version consists of bald or uncreditworthy denials, raises fictitious
disputes of fact, is palpably implausible, far -fetched, or so clearly untenable that the
court is justified in rejecting them merely on the papers.28

[115] The determination of whether a company should be placed under business
rescue in terms of section 131 of the Companies Act is fundamentally an objective
inquiry . The Court must be satisfied that in granting an order to place a company under
supervision and business rescue , the company is financially distressed or that it is
otherwise just and equitable to do so . There has to be a reasonable prospect of
rescuing the company. This determination is not about who shouts the loudest in the
affidavits, but about whether the facts , especially financial and operational , support the
statutory threshold . These applications can devolve into p ersonal attacks and rhetorical
skirmishes. A Court must filter out the noise, disregard emotive or inflammatory
language that doesn’t advance the legal merits of the case, and focus on relevant,
probative evidence .

[116] Counsel relied upon the Plascon Evans rule, the standard of how factual
disputes are resolved in motion proceedings , typically favouring the Respondent’s
version unless the denial is clearly untenable , in arguing their respective cases.
Applicant’s Counsel repeatedly emphasised that the Respondents had not seriously
and unambiguously engaged or addressed the material facts in dispute , and the
application should thus be decided on the Applicants’ version.29

[117] However, in business rescue applications, the Court is often dealing with expert
analysis of financial documents and evidence, which are not always susceptible to the
binary “he said, she said” structure of ordinary factual disputes. This Court believes th at
it may adopt a more evaluative approach in the circumstances , weighing the logic,
credibility, and coherence of expert opinions rather than applying Plascon Evans rigidly
in circumstances where there is little dispute of fact between the experts . They r ely on
the same set of contemporaneous management and financial accounts , but express

28 Plascon -Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) 634 -5; Fakie NO
v CCII Systems (Pty) Ltd 2006 (4) SA 326 (SCA) para 55; Thint (Pty) Ltd v National Director of
Public Prosecutions; Zuma v National Director of Public Prosecutions [2008] ZACC 13 ; 2008 (2)
SACR 421 (CC) para 8 -10
29 Wightman t/a J W Construction v Headfour (Pty) Ltd and Another (66/2007) [2008] ZASCA 6;
[2008] 2 All SA 512 (SCA); 2008 (3) SA 371 (SCA) (10 March 2008) at para 13
differences in how they interpret them. The Court accepts that their respective opinions
have not been subjected to cross -examination , but neither party asked for the referral of
their experts for limited oral evidence or submission to a trial.

[118] The reliable objective evidence in this business rescue application is found in the
affidavits of Gray and Potgieter and the ir expert opinions on the financial documents ,
not the added commentary from either Moors or Dreyer. Whilst both Chartered
Accountants have short tenures with VS , Grey has been there since August 2024 , and
Potgieter from January 2025 . Moors and Dreyer have b oth relied upon their respective
experts on aspects material to this application. In the latter circumstances, accusations
of bias , of which there were many, especially from the Respondents, are less relevant .
Gray has been a Chartered Accountant for a much longer period than Potgieter . Still,
the Court accepted that both have specialised knowledge and skill in a field beyond the
Court’s ordinary experience. They have the requisite experience and expertise , their
opinions are relevant to the issues that have arisen , and they have assisted the Court in
making its d etermination. Applying the Plascon Evans rule to their respective affidavits
would be contrary to the evaluation of expert opinion , which is based on logical
reasoning .30

[119] The Court has considered that their opinions are based on unaudited financials
and assumptions or incomplete information, both of which were beyond their control. In
the elemental analysis , the Court accepts that Grey’s opinions are based on the
appropriate accounting standard that should be applied to a company of the size of VS,
and he had a longer opportunity to investigate, analyse, and appreciate the challenges
applicable to VS .

[120] The Respondent’s opposition rests heavily on the opinion of it s appointed expert,
who purported to assess the company’s financial viability using the full IFRS framework.
However, the company qualifies as a small to medium enterprise, and the applicable
accounting standard is IFRS for SMEs. The expert’s reliance on t he incorrect
framework renders his conclusions methodologically flawed and substantively
unreliable. This is not a mere difference of professional opinion . It is a misapplication of

30 Michael and Another v Linksfield Park Clinic (Pty) Ltd and Another (1) (361/98) [2001] ZASCA
12; [2002] 1 All SA 384 (A); 2001 (3) SA 1188 (SCA) (13 March 2001) at para 36
the governing standard. Even the auditors have recognised the applicable s tandard as
IFRS for S MEs. The Court is therefore entitled to reject the opinion as clearly
untenable. In doing so, it does not depart from the Plascon -Evans rule, which permits
the rejection of a respondent’s version where it is palpably implausible or dem onstrably
incorrect. Moreover, the dispute between the experts is not one of primary fact but of
evaluative reasoning. The Court is thus entitled to assess the logical coherence and
evidentiary foundation of each opinion and, in this case, prefers the Appl icant’s expert,
whose analysis is grounded in the correct accounting framework and supported by
verifiable data.

The 2024 Annual Financial Statement

[121] There is one further financial document that the Court must consider. The
Respondents included the audited annual financial statements for VS for the year
ending 29 February 2024 , rather belatedly. Dreyer alleges that he was advised not to
traverse the content until the board meeting that was scheduled for 2 June 2025, which
did not occur. The Applicants agreed to the two late supplementary affidavits being
filed. They provided an analysis of the 2024 AFS, which had to be rejected as the
Respondents objected to its filing. It is unclear why Dreyer or Potgieter, to whom he ha d
access, would not have addressed the content of the 2024 AFS . The Court must
interpret the document on face value without the assistance of expert opinion . The AFS
has limited value as it relates to the operations of VS between March 2023 and
February 202 4, and is not current, except that it refers to mitigating factors that are
currently being instituted. The 2025 AFS is not before the Court in either draft or audited
form.

[122] The 2024 AFS treats VS on the basis that it is a going concern as evaluated ,
among others , under s3.8 of the IFRS for SMEs . It states that after evaluating approved
budgets , cash flow forecasts and other relevant information for at least the 12 months
from the date of authorisation of the financial statements, the foundi ng directors are
satisfied that preparation on a going concern basis remains appropriate. The Court has
had regard to Gray’s opinion that predated the filing of the AFS about whether VS
should have been assessed as a going concern or an entity in liquidation, given its dire
financial position. A going concern assessment, while relevant, is not dispositive where
credible allegations of commercial insolvency have been raised.

[123] The audi tors drew attention to the accumulated losses of R13 316 772 and that
the company’s total liabilities exceeded its assets by R7 816 672. The latter figure was
in brackets. The Court assumes that it was subject to further scrutiny by the directors of
VS. The AFS states further that as of the date of the report , i.e., 13 May 2025 , the
company continues to incur losses. The AFS referred to this business rescue
application , and contingent liabilities relating to Hendrika’s dismissal were recorded.

[124] The AFS alludes to the founding directors (Dreyer and Zondagh), who noted
certain mitigating factors relating to shareholder and lender support , capital raising
program, and return to profit initiatives. They noted that existing funding facilities remain
in place and the ultimate shareholder (the Applicants) has provided written
subordination undertakings in favour of the company's senior financing arrangement
with FNB . The founding directors stated that the s hareholder loan claims would rank
behind all present and future obligations to FNB until the company’s assets exceed its
liabilities and the FNB facility has been fully discharged.

[125] Under the header of the capital raising program , the founding directors state that
a structured recapitalisation process already underway is expected to inject additional
equit y and working capital funding during the 2026 financial year. Existing funding
facilities remained in place, and the ultimate shareholder (the Applicants) had provided
written subordinated undertakings. A structured recapitalisation is underway and is
expected to inject additional equity and working capital funding during the 2026 financial
year. The founding directors addressed the return to profit initiatives by stating that
management has implemented an expansion plan and cost optimisation measures that,
based on approved budgets and secured contracts , are projected to restore profitable
operations within the forecast period.

[126] The founding directors believed that the company would realise its assets and
settle its liabilities in the normal course of business. The going concern assessment
concludes with a grave caution. Should the contemplated funding or operational
improvements not materialise, a material unc ertainty would arise that may cast
significant doubt on the company’s ability to continue as a growing concern.

[127] The latter aspect makes the 2024 AFS relevant to the determination of the relief
sought. In addressing the return to profit initiatives, the auditors refer to the expansion
plan and cost optimisation measures implemented by management, based on approved
budgets and secured contr acts. They are expected to restore profitable operations
within the forecast period.

[128] The credible evidence is of a company with declining sales and cash flow , net
ongoing losses , and solvency and liquidity problems. The recoverability of substantial
debt from its UK , US businesses and sales to Australia is slim . The US business , in
particular, is heavily indebted to the company in circumstances where the ownership
has not been finalised. There are major problems with stock flow, v aluation and
disposal . Most damning of all, is the financials . The AFS confirms that VS has been
factually or technically insolvent since at least 2023. The Court is inclined to lean
towards Gray’s assessment of the company’s shortfall of assets over liabi lities to
amount to R25 144 325. There is very little credible evidence to support Potgieter’s
overly optimistic opinions , and the Court rejects it where it differs from that of Gray’s.
Taking all of the financial information, including the grave concerns expressed in the
2024 AFS, and the expert’s opinions into account , the Court finds that the Applicants
have succeeded in proving that VS is financially distressed. They have established
financial distress under s128(1)(f) (ii) of the Companies Act. VS’s insolvency has been a
fact for some time , obviating the need to consider whether that event is reasonably
likely to occur within the immediately ensuing six months , or whether it is just and
equitable to do so for financial reasons. There is also no need for the Court to consider
whether the company will be able to pay its debts when they become due. The Court
must then proceed to determine whether there are reasonable prospects of rescuing
the company.

Reasonable Prospects of Rescuing VS

[129] The primary purpose of business rescue is to enable a business rescue
practitioner to prepare and implement 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 t han would result from the immediate
liquidation of the company.31

[130] The Respondents contend that they have implemented a turnaround strategy
sufficient to obviate the need for formal business rescue proceedings. However, the
Court is not persuaded that this extra -statutory initiative , effectively a shadow rescue ,
offers the procedural safeguards or stakeholder protections envisaged by Chapter 6 of
the Companies Act. While the Companies Act does not prohibit informal restructuring
efforts, it is precisely the absence of an independent practitioner, the statutory
moratorium, and creditor oversight that renders such efforts legally inadequate in the
face of demonstrable financial distress. The Court cannot endorse a process that
mimics business resc ue in form but lacks its substance. To do so would be to permit the
circumvention of a carefully constructed statutory framework designed to balance the
interests of all affected parties. Accordingly, the Court finds that the Respondents’
reliance on an in formal strategy does not displace the Applicant’s entitlement to relief
under section 131(4) (a).

[131] The Applicants submit that there is a reasonable prospect of rescuing VS
through a structured business rescue process. It remains a viable enterprise with st rong
brand recognition and market potential . Still, immediate intervention is required to
correct its severe financial mismanagement, restore cash flow, and implement proper
financial systems. The ir plan caters for immediate financial stabilisation, operat ional
restructuring, debt restructuring and credit negotiations, restoring profitability and
growth, and implementing governance and compliance measures. Business rescue
promises a better return than liquidation .

[132] The essentials of the Applicant’s plans shall be recorded here. They estimate an
immediate injection of R5 million into the company and a deferred amount of a further
R5 million over the next 12 to 18 months. They intend to recover outstanding debts ,

31 Ragavan and Others v Optimum Coal Terminal (Pty) Ltd and Others (136/2022) [2023] ZASCA
34; 2023 (4) SA 78 (SCA) (31 March 2023), at para 23, s128(1)(b)(iii)
especially the R9.9 million owed by Cali Buntu , halt excessive discounting of stock ,
placate and settle suppliers, and institute rigorous financial reporting systems. They
envisage operational restructuring by restoring financial discipline and overseeing cash
flow management, producing accurate financial statements, reducing monthly
overheads , overhauling procurement processes and ceasing unprofitable international
expansions and focusing on high-margin domestic markets to improve revenue. They
envisage a restructuring of outstanding shareholder and supplier loans , engaging
secured creditors like FNB to negotiate a phased repayment plan, convert a portion of
shareholder loans into equity to reduce debt pressure and attract further investment ,
and prioritise the settlement of key supplier accounts to secure essential inventory . As
for the restoration of profitability and growth, they contemplate strict financial oversight
mechanisms, focusing on restoring gross profit margins, implementing revised sales
strategies, engaging potential investors in exchange for equity , and introducing financial
tracking tools to monitor transactions and flag discrepancies before they become
financial risks. The governance and compliance measures follow prudent principles that
need not be repeated here. The post-commencement finance strategy , alluded to
earlier in this judgment , includes the raising of about R15 million, debt restructuring ,
inventory managemen t, and financial oversight improvements . The Applicants relied on
Gray ’s assistance in developing their plan and his forecasts until 2027. The Applicants
submitted that by implementing these measures, business rescue presents a far
superior alternative to liquidation and offers creditors a significantly better dividend by
preserving the company.

[133] Dreyer relied on Potgieter’s opinions and denied the need for business rescue.
He claims that the Applicant’s plan is , in large part, a carbon copy of his business
strategy. He can then have no objection to the Court approving it. Dreyer distinguishes
his plan from the Applicants in one respect. The Applicants aim to stop the growth of
the business and scale back its operations. The contention cannot be correct. The
Applicants are rightfully insecure about the overseas expansion, preferring rather the
high-yield domestic market. Dreyer persists in attributing the ills of the c ompany to
Hendrika. The Court asked and repeated the unanswered question as to where he and
Zondagh, the executive founding directors, were when all the ills of the company
attributed to Hendrika were occurring. The Respondent's dirty hands theory must rest.

[134] The Court finds that the Applicants have placed before it a preliminary
turnaround strategy, supported by evidence of a committed capital injection and a
detailed plan of action. Notably, this plan has elicited a measure of support from the
Respondents, albeit in oblique terms. Taken cumulatively, these elements provide a
credible and objectively grounded basis for concluding that there exists a reasonable
prospect of rescuing the company within the meaning of section 131(4) of the
Companies Act.

Appointment of a Business Rescue Practitione r

[135] The Applicants nominated Julian Empedocies as the business rescue
practitioner. He has expertise in financial restructuring and turnaround strategies.
Empedocies gave written confirmation of his willingness to accept the appointment and
provided his curriculum vitae, licence certificate, and consent to act. He has reviewed
the financial documents provided to him and confirms that VS is financially distressed
and t hat there is a reasonable prospect of rescuing it through a structured intervention.
The Applicants seek that the Court appoint Empedocies as the interim business rescue
practitioner under s131(5) of the Act. The appointment will be subject to ratification by
the holders of the majority of independent creditors' voting interests at the first meeting
of creditors to be held during the business rescue proceedings .

[136] The Respondents contended that Empedocies does not know the inner workings
of VS. His appoin tment will be an entirely unnecessary cost to the business. The Court
is satisfied that the Applicants have made out a case for the appointment of
Empedocies as the business rescue practitioner under s131(5) of the Act.

[137] The Applicants have succeeded in obtaining the relief sought in the business
rescue application. There is no reason why t he costs should not follow the cause. The
Applicants sought party and party costs with Counsel’s fees on Scale C. The Court
explained why an interpretation of the scales applicable to advocates' fees permits one
Counsel's fees on scale C and the other’s on ly on scale A , where two Counsel are
involved . There is no reason for the Court to apply its discretion and deviate from this
interpretation. Had the legal team co nsidered transformation initiatives , like appointing a
third female Counsel or a Counsel of colour , in the selection or addition of Counsel, the
Court may have been persuaded to grant a more generous cost order. The pool of legal
representati on in this branch of the law must grow and become more inclusive.

CONCLUSIONS

[138] The Court has considered three applications relating to a common thread of facts
weaving through them. The applications concern a homegrown company that has
aspired to become a global entity. That aspiration has be en tempered by serious
allegations relating to the expansion ambitions , culminating in these applications.

[139] In the Interdict Application , the Court accepts that it has been overtaken by the
efflux of time since its institution but regrets the lapse in attention to detail and the
failure of Counsel to effect the changes to the papers timely and avoid inconveniencing
the Court and the Respon dents from reading the voluminous papers relating to
abandoned and unclear relief . The costs order against the Applicants is warranted as a
sign of the Court’s displeasure.

[140] The counterapplication seeking to declare two directors delinquent was without
merit and considered to be opportunistic, if not cynical. There too, the offending party
will be mulcted with the appropriate cost order.

[141] Finally, the business rescue application proved to be meritorious , and the
Applicants have succeeded in obtaining the relief sought. The Court makes the order
that follows.

ORDER

1. The application under case number 24391/24 is dismissed with costs. The
Applicants shall pay the Respondents' taxed or agreed costs on an attorney -
client scale.
2. The application to strike out is dismissed. Each party shall pay their own
costs .
3. The counterapplication under case number 2 4391/24 is dismissed with costs .
The Third, Fourth and Fifth Respondents shall pay the Applicant’s taxed or
agreed costs on an attorney -client scale.
4. Under case number 2025 -015315.
4.1 The First Respondent, Veldskoen Shoes (Pty) Ltd , is placed under
supervisio n and business rescue proceedings will commence in the
manner contemplated under section 131(4) of the Companies Act 71 of
2008 (the Act) ,
4.2 Mr Julian Empedocies, with identity number 8901295128087 , is
appointed as the interim Business Rescue Practitioner of the First
Respondent under s131(5) of the Act ,
4.3 The Third and Fourth Respondents shall pay the Applicants taxed or
agreed costs on a party and party scale with Senior Counsel’s costs as
taxed or agreed on scale C and Junior Counsel’s fees on scale A.



_____________________________
BHOOPCHAND AJ
Acting judge
High Court
Western Cape Division


Judgment was handed down and delivered to the parties by e -mail on 20 June 2025

Applicants Counsel: G Wickins SC, G Solik
Instructed by Rushmere Noach Attorneys

Respondent’s Counsel: J G Dickerson SC, S G Fuller
Instructed by Cliffe Dekker Hofmeyr Inc