IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL LOCAL DIVISION, PIETERMARITZBURG
Case no: 17260/22P
In the matter between:
ABSA BANK LIMITED Applicant
and
BENRITE PROPERTY INVESTMENTS CC First Respondent
(Registration Number 1987/029348/23)
ANUSHA PILLAY Second Respondent
ANUSHA PILLAY NO Third Respondent
JUDGMENT
Ainslie, AJ.
[1] This application was brought by the applicant for the winding up of the first
respondent. The applicant loaned the first respondent monies under two loan
agreements, secured by mortgage bonds, while surety was provided by the third
respondent and her now deceased husband. The second and third respondent are
the shareholders of the first respondent.
[2] An application to intervene by the members was brought by Ms Pillay in her
own capacity, and in her capacity as the executrix of her husband’s deceased estate.
This application was not opposed and was granted at the hearing of the opposed
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motion. The respondents brought a counter application and opposed the liquidation
application.
[3] The first to third respondents shall collectively be referred to as the
respondents herein , while the second and third respondents shall be referred to
collectively as the members.
[4] The initial demand by the applicant to remedy its breach, being the default of
payment of the loans, was made to the first respondent in June 2021. This resulted
in four payments being made, totalling just under R2.5 million . Thereafter letters of
demand were despatched, including by service by the sheriff, on 22 August 2022,
followed by statutory demands on 19 October 2022, without the first respondent
making any further payment.
[5] The application for liquidation was launched on 16 January 2023 and on 2 6
August 2024, the order provisionally winding up the first respondent was granted.
[6] The application for the winding up of the first respondent was opposed, and a
counter application was brought by the respondents for the first respondent to be
placed under business rescue . It is common cause that should the counter
application fail, the liquidation was to be confirmed. It is furthermore common cause
that the first respondent is both commercially insolvent and financially distressed,
even if its assets exceed its liabilities , which is not evident on the papers . Common
cause also is that the first respondent is no longer trading as a property development
company, with its activities restricted now to that of a property-owning close
corporation.
[7] Not in dispute is the respondents’ intention to sell off the properties owned by
the first respondent and to pay the debts owed from the proceeds of the sales. To
clarify, there are two main creditors, that is to say the applicant, whose loans are
secured by mortgage bonds and the personal suretyships of the members , and the
body corporate of the sectional title properties. The debt to the body corporate on the
body corporate of the sectional title properties. The debt to the body corporate on the
respondents’ own version was just over R1.7 million 1 at the time of their affidavit
commissioned on 1 November 2024. The debt to the applicant is disputed, without
1 Counter application, founding affidavit para 59.6.
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addressing that discrepancy here, suffice to say at present it is between R7 million
and R12 million.2
[8] It became evident that the crux of the decision to be made was, as the
argument went, between ‘winding up’ and ‘winding down’. Put differently, is the close
corporation to be placed in liquidation or under the stewardship of a business rescue
practitioner?
[9] Counsel for the respondents referred to and placed reliance on aspects of
Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami)
(Pty) Ltd and Others.3 The respondents place reliance on the second of two objects
or goals of s 128(1)(b)(iii) of the Companies Act 71 of 2008 (‘the Act’), in particular
that although the primary goal is that of the continued existence of the business, the
secondary goal of facilitating a better return for creditors or shareholders is also a
valid reason to allow for business rescue. This is accepted. The respondents must
establish grounds for the reasonable prospect of achieving this goal.
[10] How the respondent is to show reasonable prospects is not prescriptive. The
requirement is a lesser requirement than ‘reasonable probability’ but more than ‘a
mere prima facie case or an arguable possibility’ based on reasonable grounds, not
mere speculation.4
[11] It has been noted5 that since implementation of the Act, while business rescue
may not commence by resolution of the company after the commencement of
liquidation proceedings,6 it can be brought by affected persons even thereafter.7 This
is mentioned as background as regards the ‘narrow’ discretion the court has when
unpaid creditors seek a winding up order, being entitled, as a right, ex debito
justitiae, to a winding up order.
2 Counter application, founding affidavit para 35.
3 Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty) Ltd and
Others [2013] ZASCA 68; 2013 (4) SA 539 (SCA) (‘Oakdene’).
4 Oakdene para 29.
Others [2013] ZASCA 68; 2013 (4) SA 539 (SCA) (‘Oakdene’).
4 Oakdene para 29.
5 FirstRand Bank Ltd v Imperial Crown Trading 143 (Pty) Ltd 2012 (4) SA 266 (KZD) paras 16-19.
6 Section 129(2)(a) of the Companies Act 71 of 2008.
7 Section 131(1) of the Act.
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[12] The respondents state that appointment of a rescue practitioner, ‘will lead to a
far better return for the First Respondent's creditors and its members’ .8 The
respondents contend the first respondent would be better positioned to realise the
value of the properties with the appointment of a business rescue practitioner, stating
that a forced sale price will be lower than what can be achieved on the open market.
In response, the applicant’s counsel reminded the court that the liquidator too is able
to sell the property on the open market , and it does not necessitate a forced sale by
the sheriff.
[13] In Oakdene9 the court specifically held:
‘[33] My problem with the proposal that the business rescue practitioner, rather than the
liquidator, should sell the property as a whole, is that it offers no more than an alternative,
informal kind of winding -up of the company, outside the liquidation provisions of the 1973
Companies Act which had, incidentally, been preserved, for the time being, by item 9 of sch
5 of the 2008 Act. I do not believe, however, that this could have been the intention of
creating business rescue as an institution. For instance, the mere savings on the costs of the
winding-up process in accordance with the existing liquidation provisions could hardly justify
the separate institution of business rescue. A fortiori, I do not believe that business rescue
was intended to achieve a winding -up of a company to avoid the consequences of
liquidation proceedings, which is what the appellants apparently seek to achieve.
[34]. . .In motivating this proposal the appellants relied on two grounds. The first was that a
business practitioner would be able to obtain a better price for the property than a liquidator.
But I share the court a quo's difficulty in understanding why this should be so. . . In short,
this ground appears to rest on no more than pure speculation.’ (References omitted.)
this ground appears to rest on no more than pure speculation.’ (References omitted.)
[14] With reference to Ally v FirstRand Bank Limited and Others 10 on which the
respondents placed reliance, the reasonable prospects and the goal to be attained
through business rescue here make it distinguishable. In that matter a detailed report
from business rescue practitioner had been prepared, the company was a going
concern, had 26 employees , who were represented and opposed the winding up ,
they had two purchase and sale offers for the immoveable property in hand and had
realisable stock of some R5 million. Here, there are several immoveable properties
which have to be sold separately and only three employees. These employees are :
8 Counter application, founding affidavit, para 6.2.
9 Oakdene paras 33 and 34.
10 Ally v FirstRand Bank Limited and Others [2024] ZAKZPHC 36.
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the third respondent, who is a member of the first respondent ; her son ; and one
other.11
[15] This application for business rescue is more similar to the facts presented in
Oakdene, such as the promised sale of bonded immovable property, with a likelihood
of the sale of the property taking time, currently sans any actual and realistic offers.
[16] On the respondents’ own version, the members will either personally have to
pay their own personal monies into the close corporation, or the first respondent will
have to borrow monies elsewhere – referred to by the applicant as ‘borrowing from
Peter to pay Paul ’. As set out clearly in the applicant’s heads of argument, while the
ability to do so may show creditworthiness, it ‘corroborates the [first] respondent's
inability to pay its debts and vindicates the applicant's application for the
respondent's winding-up’.12
[17] Submissions were made regarding the suretyships signed by the members for
the loans, in the event that the company was wound up instead of wound down, ie
placed under supervision of a business rescue practitioner. The respondents’
submissions were that capital would likely have to be made available from the
member’s personal estates, and their application for business rescue ensures that
there is sufficient capital available, just not immediately realisable.
[18] The court was invited to consider the applicant’s ability to call on the
suretyships as a reason that the business rescue is of benefit to the shareholders as
referred to in the Act, as members of the close corporation. Although it is admitted
that the suretyships were signed by the members qua members of the close
corporation, sight must not be lost of the first respondent being a separate legal
entity to its members, and that the suretyships are in their personal capacity. Be that
as it may, the concerns regarding the applicant’s ability to call on those suretyships
as it may, the concerns regarding the applicant’s ability to call on those suretyships
remains unchanged by either liquidation or business rescue, other than the timing
thereof.
11 Counter application founding affidavit annexure APB.
12 Applicant’s heads of argument, para 29 with reference Express Model Trading 289 CC v Dolphin
Ridge Body Corporate [2014] ZASCA 17; 2015 (6) SA 224 (SCA) para 16.
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[19] As the major creditor, the applicant is entitled to seek the liquidation of the first
respondent. Th e application for liquidation can be suspended by a reasonable
prospect of business rescue, even if it is applicable only to the secondary goal of
greater benefit to the creditors or shareholders.
[20] I refer again to Oakdene, as that judgment also provides authority in response
to the applicant’s submission that it will oppose any business rescue plan:
‘[37] In these circumstances I do not believe Nedbank and Imperial can be branded
unreasonable in their declared intent to oppose any business plan in line with either of the
two options proposed by the appellants. The court a quo regarded this declared intent by the
two major creditors — and the holders of 60% of the shareholding in the company — as one
of the reasons why business rescue was doomed to fail. . .
[38] If the statement is intended to convey that the declared intent to oppose by the majority
creditors should in principle be ignored in considering business rescue, I do not agree. As I
see it, the applicant for business rescue is bound to establish reasonable grounds for the
prospect of rescuing the company. If the majority creditors declare that they will oppose any
business rescue scheme based on those grounds, I see no reason why that proclaimed
opposition should be ignored. Unless, of course, that attitude can be said to be
unreasonable or mala fide. By virtue of s 132(2) (c)(i) read with s 152 of the Act, rejection of
the proposed rescue plan by the majority of creditors will normally sound the death knell of
the proceedings. It is true that such rejection can be revisited by the court in terms of s 153.
But that, of course, will take time and attract further costs.’
[21] It is therefore evident, that there are little to no prospects of a successful
business rescue. That option will entail not only extra costs and cause further delay;
business rescue. That option will entail not only extra costs and cause further delay;
it will in fact cause a not insignificant increase in the amount owed through the
accumulation of further interest which is already substantial. As was noted above,
the applicant has not received payments since 2022, and only sporadic payments
during 2021 . The amount owing to the applicant is said, on the respondents’ own
version, to be ‘a large portion of which is made up of interest and associated charges
for the period 2021 to present ’.13 The respondents dispute this amount, attributed by
the respondents to the applicant’s interest and charges being ‘excessive’, despite
that these charges are contractually agreed.
13 Counterclaim founding affidavit para 35.
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[22] This court therefore rejects the submission made in the respondents’ heads of
argument that the application for winding up is persisted with to ‘perhaps … punish
its members (shareholders) ’. I hold the view that the applicant’s liquidation
application ought not to be delayed , to achieve a benefit for the members, insofar as
least as it brings finality and curbs , at the earliest possible time, the continued
interest on the loans, entered into by the first respondent, and the suretyship of the
members.
[23] In the circumstances, the respondents have failed to show reasonable
prospects that business rescue will be to the advantage of creditors or shareholders.
ORDER:
Based on the above, the following order is granted:
1. The respondent’s counter application is dismissed with costs including the
reserved costs of 5 November 2025.
2. The rule nisi granted on 26 August 2024 is confirmed.
___________________
AINSLIE AJ
Heard: 29 August 2025
Delivered: 5 September 2025
APPEARANCES
Counsel for the applicant: Mr W Pietersen
Instructed by: LOWNDES DLAMINI INC
56 Wierda Road East, Cnr. Albertyn
Ave
8
Wierda Valley, SANDTONt
Locally represented by:
AJ JOHNSTON & PARTNERS
2nd Floor, 81 Richefond Circle
Ridgeside Office Park, Umhlanga
Rocks
c/o STOWELL & CO
295 Pietermaritz Street
PIETERMARITZBURG
Counsel for the first, second & third respondents: Mr G. Reddy
Instructed by: Anand Pillay Attorneys Inc
460 Town Bush Road
Montrose
Pietermaritzburg