IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
In the matter between:
FIRST RAND BANK LTD
INVESTEC BANK LTD
and
AZRAPART(PTY)LTD
THE COMPANIES AND INTELLECTUAL PROPERTY
COMMISSION
Not reportable
Case number: 4437/2024
FIRST APPLICANT
SECOND APPLICANT
FIRST RESPONDENT
SECOND RESPONDENT
Neutral Citation: First Rand Bank Ltd and Another v Azrapart (Ply) Ltd and Another
(4437/2024) [2025] ZAFSHC 263 (27 August 2025)
Coram: Loubser J
Heard: 8 August 2025
Delivered: 28 August 2025
Summary: Application for leave to appeal - whether the trial court should have found
abuse and ulterior motive on part of applicants instead of placing the first respondent under
supervision and business rescue in terms of s 131 of the Companies Act 71 of 2008.
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ORDER
1 The application for leave to appeal is dismissed.
2 Costs of the application shall be costs in the business rescue of the first respondent
on the attorney and client scale.
JUDGMENT
LoubserJ
[1] This is an application by the first respondent for leave to appeal against the order
and judgment of this court on 5 June 2025 placing the first respondent under supervision
and business rescue proceedings in terms of s 131 of the Compan ies Act 71 of 2008.
The application is based on the premise that there is a reasonable prospect that an appeal
would be successful.
[2] The first respondent owed the two applicants a total outstanding amount of R2 .3
billion at the time the main business rescue application was heard by the court. This
outstanding amount was not in dispute between the parties, nor was there any dispute
concerning ·the fact that the first respondent was unable to pay it. Furthermore, it was the
case for the applicants that the first respondent can be successfully rescued. On the
papers before the court, such prospect was not disputed by the first respondent. The court
consequently found that there were strong indications that the first respondent is in
financial distress.
[3] These facts established the jurisdictional requirements for placing the first
respondent under supervision and commencing business rescue proceeding as
contemplated in s 131 (4) of the Companies Act 71 of 2008. In terms of that section, a
court may make such an order if it is satisfied the company is financially distressed, that
the company has failed to pay over any amount in terms of an obligation under contract,
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or it is otherwise just and equitable to do so for financial reasons, and there is a
reasonable prospect for rescuing the company. In my view, there is no reasonable
prospect that another court would find differently on the aforesaid facts that were before
the trial court.
[4] Notwithstanding, the application for business rescue was vigorously opposed by
the first respondent. It's defence mainly consisted in the allegation that it was in the
process of finalizing a transaction with a company registered in the UK . In terms of this
transaction the first respondent would receive a cash injection of R2.6 billion from the
company, which is known as Redcore Hospitality Holdings Limited (Redcore). In an
affidavit filed on behalf of the first respondent, it undertook to make payment of that R2 .6
billion to the applicants, once received, which would be more than sufficient to cover the
liability of the first respondent towards the applicants.
[5] As things turned out, different courts of this Division have postponed the business
rescue proceedings for over a period of nine months to allow this transaction to come to
fruition, because it speaks for itself that the first respondent would no longer be in financial
distress upon receipt of the R2.6 billion. When the application was finally heard by this
court on 28 November 2024, it was still not clear whether Redcore would definitely pay
the amount in question to the first respondent. The court consequently made certain
orders on 27 March 2025 for supplementary affidavits to be filed by the parties in order to
be informed of the progress made by the first respondent in obtaining the promised
Redcore funds.
[6] After the filing of the supplementary affidavits as ordered, the court came to the
conclusion in its final judgment dated 5 June 2025 that, on a balance of probabilities,
Redcore will not be able to provide the R2.6 billion injection to the first respondent soon,
Redcore will not be able to provide the R2.6 billion injection to the first respondent soon,
or at all. The court found that the matter then needed to be brought to finality in the
interests of justice, and made the order placing the first respondent under supervision
and business rescue proceedings.
[7] For reasons that will appear more fully later herein, it needs brief mentioning that
three days before the application for business rescue was heard in court, the first
respondent filed a substantive application for an order directing that oral evidence be
heard on the issue whether the representative of the first respondent, Mr Georgiou, had
signed the cross guarantees on which the applicants had also relied when claiming that
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the first respondent owed them R2.6 billion. The application was made because the
applicants had alleged that it is Mr Georgiou's signature that appeared on the cross
guarantee papers, while the first respondent denied it vehemently. According to the first
respondent, it had expert evidence at its disposal showing that the signatures of Mr
Georgiou were forged on the documents. It was contended on behalf of the first
respondent that this dispute could not be resolved on the papers and that a referral to the
hearing of oral evidence was called for.
[8] However, at the hearing of the application, it was pointed out on behalf of the
applicants that the quantum of the cross guarantees represented only a negligible 12%
of the total indebtedness of the first respondent towards the applicants. The court was
then informed that, as a result, the applicants were no longer relying on this debt in their
application to have the first respondent placed in business rescue.
[9] Since there was subsequently no tis between the parties any more on the issue of
the signatures of Mr Georgiou, the court found that the issue had become moot. It
therefore dismissed the referral application in its judgment of 27 March 2025.
[1 O] l now turn to the application for leave to appeal itself. In the Notice of Application
for leave to Appeal, it is contended on behalf of the first respondent that the court has
erred in the following respects: by dismissing the application for the referral of the issue
of Mr Georgiou's signature for oral evidence, and by placing the first respondent in
business rescue. It is contended that a referral could have justified an inference of bad
faith, ulterior purpose, and abuse of process on the part of the applicants, which would
preclude them from seeking to place the first respondent into business rescue. As for the
order of business rescue, it is contended that the court had erred in finding that the
order of business rescue, it is contended that the court had erred in finding that the
jurisdictional requirements had been satisfied, and in finding that the first respondent was
in financial distress and unable to pay its debts. In this respect the court has failed to take
into account that the applicant had an ulterior motive and that the application for business
rescue constituted an abuse of process that was not supported by the facts or the law, it
is contended.
[11] Further, that the court did not attach sufficient weight to Redcore's confirmation
regarding its accessible funding of R2 .6 billion, in particular that the court ignored
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Redcore's written confirmation dated 8 May 2025 that the funding was in place. It is further
contended that it was neither just nor equitable for the first respondent to be rescued for
financial reasons.
[12] At the hearing of the application for leave to appeal, Mr. LOderitz, appearing for the
first respondent, focused mainly on the alleged abusive conduct of the applicants which
placed it in a vulnerable position. He submitted that the first respondent had pleaded in
its answering affidavit that the applicant sought to advance a strategy of placing it under
financial pressure by accelerating all of the first respondent's debts, and that this
amounted to an abuse. The first respondent had pointed out in their answering affidavit
that this conduct started when the applicants proposed a deal in terms of which they
would have been paid the indebtedness by the first respondent and would have retained
significant equity in the first respondent, in exchange for not foreclosing on the first
respondent as they had threatened. These terms were not acceptable to the first
respondent initially, but under the pressure and following the coercion of the applicants,
Mr Georgiou signed the deal. However, the other two trustees of the Michael Family Trust
whose consent was also required, refused to sign the deal.
[13] Mr LOderitz further pointed out that the first respondent claimed in its answering
affidavit that the applicants then elected to invoke the acceleration clause in the
agreements to demand the entire outstanding balance of their facility of more than R2 .3
billion within three days of their demand. This was done only as a pretext for seeking to
justify the business rescue application.
[14] Lastly, Mr. LOderitz contended that the dispute of fact on the papers concerning
the question whether Mr Georgiou's signatures on the cross guarantees are forged, was
material to the adjudication of the application. The hearing of oral evidence in this respect
material to the adjudication of the application. The hearing of oral evidence in this respect
might have justified an inference of bad faith and ulterior purpose against the applicants,
which would preclude them from seeking to place the first respondent in business rescue.
[15] This court was also criticized because it did not mention or engage the first
respondent's case concerning the abusive conduct of the applicants in its judgment. Here
reference was made to what was stated by the Constitutional Court in Vodacom (Pty) Ltd
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v Makate1 as follows: 'a court will have failed in its constitutional duties to give the case
proper consideration and to give reasons for its decision if the court's judgment does not
contain adequate reasons evidencing such proper consideration.'
[16] The question now remains whether there is a reasonable prospect that a court of
appeal would uphold all or some of these submissions and come to a different conclusion
than the one reached by this court. I do not think that there is such a reasonable prospect
for the following reasons:
a) Another court would not find that a referral for the hearing of oral evidence would
have justified the inference of bad faith and ulterior purpose on the part of the applicants.
This is so because there is no allegation or indication on the application papers that the
applicants themselves were complicit in any forgery of the signatures of Mr Georgiou.
They were only in possession of cross guarantees that prima facie appeared to bear his
signatures, and they had available witnesses who would 'apparently confirm that they
were present when he had signed. In any event, the cross guarantees and the signatures
on it became irrelevant after the applicants had abandoned their reliance on them at the
hearing of the application for business rescue.
b) No other court would find on the papers that the first respondent is not in financial
distress and unable to pay the debts.
c) No other court would attach any weight to the submission that Redcore had
confirmed that the funding of R2.6 billion was in place and that it had access to such
funds. It would clearly appear from the papers that no affidavits by Redcore were
presented by the first respondent, but only confirmatory letters that constituted
inadmissible hearsay in the circumstances.
d) No other court would conclude that the applicants were acting with an ulterior
motive when they proposed the deal mentioned above, simply because the deal never
motive when they proposed the deal mentioned above, simply because the deal never
came to life because the other trustees refused to sign the deal. In addition, the applicants
were entitled to accelerate the debt of the first respondent in terms of the acceleration
clauses appearing in the agreements between the parties. Therefore, in my view, no other
court would find an ulterior motive in the acceleration of the debt. It would rather be found
that the applicants only wanted to get paid what they were entitled to.
e) As for the court's failure to engage the version of the first respondent in its
judgment relating to abuse and ulterior motive on the part of the applicants, I am of the
1 Vodacom (Pty) Ltd v Makate [2025) ZACC 13 para 61 .
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view that no other court wou ld find that the version of the first respondent in these respects
raised creditworthy, plausible and tenable issues, in light of what has been set out
immediately above. After all, in National Director of Public Prosecutions v Zuma 2 the
Supreme Court of Appea l has held that a court may only reject the respondent's version
in motion proceedings if it 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.
[17] In the premises, the application for leave stands to be dismissed. As for costs, I
regard it as appropriate to order costs on the attorney and client scale, to be costs in the
business rescue of the first respondent.
[18] I make the following order:
1 The application for leave to appeal is dismissed.
2 Costs of this application shall be costs in the business rescue of the first
respondent on the attorney and client scale.
PJ LOUBSER
JUDGE OF THE HIGH COURT
2 National Director of Public Prosecutions v Zuma (2009] ZASCA 1; 2009 (2) SA 277 (SCA) para 26.
Appearances
For the applicants:
Instructed by:
For the first respondents:
Assisted by:
Instructed by:
M Antonie SC
Edward Nathan Sonnenbergs Inc.
c/o Phatshoane Henney Inc.
Bloemfontein
K W Luderitz SC
D Sive
Fluxmans Inc,
c/o EG Cooper Majiedt Inc.
Bloemfontein
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