SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
Not reportable
Case no: 3528/2025
In the matter between
VINCENT GREAME LEEACH FIRST APPLICANT
THE EMPLOYEES OF THE FIRST RESPONDENT SECOND APPLICANT
and
BLOEMFONTEIN ABATTOIR (PTY) LTD FIRST RESPONDENT
(In Provisional Liquidation)
ELRICH RUWAYNE SMITH N.O. SECOND RESPONDENT
KARABO ANZER MOETSI N.O. THIRD RESPONDENT
COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION FOURHT RESPONDENT
MASTER OF THE HIGH COURT
BLOEMFONTEIN FIFTH RESPONDENT
STANDARD BANK OF SOUTH AFRICA INTERVENING CREDITOR
Neutral Citation: Vincent Graeme Leach and Another v Bloemfontein Abattoir (Pty)
Ltd and Others (3528/2025) [2025] ZAFSHC 314 (3 October 2025)
Coram: Van Rhyn J
Heard: 31 July 2025
Delivered: 3 October 2025
Summary: Semi-urgent a pplication for order placing company (currently under
provisional liquidation) into business res cue – s 131(4) of the C ompanies Act 71 of
2008 – opposed by intervening creditor on basis that company hopelessly
commercially and factually insolvent and no reasonable prospects exists that
company could be rescued or that better return for creditors could be obtained.
Applicants ha ve set out likely cos ts of rendering company able to resume its core
business and availability of cash to meet its day -to-day expenditure and nature of the
resources. Feasible turnaround strategy identified by proposed business rescue
practitioners and viability addressed.
___________________________________________________________________
ORDER
1 The application is heard urgently in terms of rule 6(12) and applicants’ failure
to comply with the forms, service and periods as provided for in the Uniform Rules of
Court is condoned.
2 The first respondent is placed under supervision and business rescue as
contemplated in s 131(4) of the Companies Act 71 of 2008.
3 Stephanus Joh annes Marthinus Steyn and Jaco Grobbelaar are appointed
as business rescue practitioners of the first respondent as contemplated in section
131(5) of the Companies Act 71 of 2008, with all the powers and duties entrusted to
them in terms of the Companies A ct 71 of 2008 subject to ratification of such
appointments by the majority of the independent creditors’ voting interests at the first
meeting of the first respondent’s creditors.
4 Costs of this application, including the cost of counsel on Scale C shall be
paid by the intervening creditor, Standard Bank of South Africa Ltd.
JUDGMENT
Van Rhyn J
[1] The company, Bloemfontein Abattoir (Pty) Ltd (in provisional liquidation) (the
Company) historically operated as an abattoir and meat processing facility,
specialising in the slaughtering, deboning, processing and packaging of red meat
products with its operations conducted in Bloemfontein. The applicants brought a
semi-urgent application in terms of s 131( 1) read with s 131(4) of the Companies
Act 71 of 2008 (Companies Act) to convert the liquidation proceedings of the
Company, cited as the first respondent, into business rescue proceedings.
[2] The application is brought by the first applicant, Mr Gra eme Vincent Leach
(Mr Leach) ; he is an employee, shareholder as well as the managing and sole
director of the Company. Mr Leach is the holder of 50% of the ordinary shares in the
Company while the other 50% is held by the Leach Enterprise Trust of which he is a
co-trustee. The second applicant is collectively approximately 38 of the employees of
the Company who support the application for business rescue as they are of the
opinion that the Company could be saved and that it would ensure tha t they would
not form part of the statistics of unemployed members of the community.
[3] The application is opposed by the intervening creditor, Standard Bank of
South Africa Limited (the Bank), the applicant creditor for the Company’s liquidation.
The Company was provisionally wound up in terms of an order of this Court on 29
November 2024. The second respondent, Elrich Ruwa yne Smith NO, and third
respondent, Karabo Anzer Moetsi NO, were appointed as provisional liquidators on
6 December 2024 . The provisional winding up order was postponed and the rule
nisi extended, b y agreement between the parties , on numerous occasions since
November 2024, with the final postpone ment for the matter to be heard on the 31st
of July 2025.
[4] The urgent application for placing the provisionally liquidated Company into
business rescue was issued on 9 July 2025. The parties exchanged affidavits and
heads of argument were filed on behalf of the applicants and the Bank. Having
regard to the fact that the rule nisi was extended to be heard on 31 July 2025 , and
that the proposed business rescue practitioners filed a report after investigating the
affairs of the Company at the request of Mr Leach, I am satisfied that the matter
was indeed ripe for hearing on the semi -urgent roll as submitted by Mr Zietsman
SC, counsel on behalf of the applicants.
[5] However, s ubsequent to the hearing of the application on the 31st of July
[5] However, s ubsequent to the hearing of the application on the 31st of July
2025 and after judgment was reserved, the parties once more attempted to settle the
matter. On 8 August 2025 the parties requested the court to provide a further
opportunity to settle the dispute with the result that the delivery of the reserved
judgment was kept in abeyance pending a possible settlement of the matter. On 28
August 2025, the Registrar was informed that settlement of the matter could not be
reached and that the adjudication of the matter by the court is awaited.
[6] It is common cause that the Company is financially distressed within the
meaning of s 128(1) (f) of the Companies Act . The applicants admit that the
deficiency of total liabilities to total assets amounts to R39 630 064. The total assets
amount to R22 790 814, with the total liabilities being R62 420 878. The applicants
admit that the Company is commercially insolvent in that it is unable to pay its debts
as and when such debts become due.
[7] Mr Leech’s father, who passed away during 2018, acquired the Company
during 1998. At the height of its operations , the Company employed approximately
175 employees. The Company conducted its operations from a premises situated at
Erf 2[...], R[...] G[...] Avenue, Bloemfontein under a long -term lease contract
concluded with the Department of Rural Development and Land Reform. The lease
is for a period of 30 years , 18 of which remain. The lease agreement allows for the
Company to sublet the premises , or portions thereof , and affords considerable
flexibility in its use and improvement of the premises. The Company is enti tled to
affect alterations and improvements required for operational purposes or by new
legislation and, where such improvements enhanced the value of the premises, to
deduct the costs thereof from the rental due. The expenses incurred towards
maintaining the property could be applied as a rental credit since the lessor failed to
maintain the property in any way . Due to the Company’s maintenance toward the
property, its rental credit is currently R9 469 798.
[8] According to Mr Leach , the reasons for the financial distress of the Company
can be attributed to a combination of internal and external factors which, over time,
eroded the Company’s liquidity, undermining its ability to meet its financial
eroded the Company’s liquidity, undermining its ability to meet its financial
obligations as they became due and rendered it commercially vulnerable. It is
contended that t he most significant cause of the financial distress was the outbreak
of Foot and Mouth Disease during 2022 which severely disrupted the livestock
supply chain across South Africa and particularly in the Free State Province. As a
result of the restrictions implemented following the outbreak of the disease , the
Company experienced substantial supply shortages, particularly in respect of cattle,
which were central to its processing operations. The supply shortages lead to a
dramatic reduction in throughput, turnover and cash flow, while the fixed overhead
costs of the Company remained constant and unrelenting.
[9] Several key suppliers were lost by the Company during and subsequent to the
Foot and Mouth Disease period primarily due to the inability of the Company to
match favourable payment terms , offered by a major competitor , to counter
shortages. A further set back was experienced during 2023 w hen two major
customers default ed on payment of a substantial bad debt of approximately R4
million. This was compounded when Mr. Leech’s brother’s company failed to pay a
debt in the amount of R20 million owed to the Company for stock.
[10] A further factor which, so it is contended, contributed to the financial problems
experienced by the Company was operational inefficiencies. The Company was
staffed for high -capacity utilisation, around 90%, despite only utilising between 20%
and 25% of available capacity which declined even further following the outbreak
and subsequent market disruptions.
[11] In addition, Mr Leach contends that his divorce and the fact that he moved
from Bloemfontein to Cape Town during 2021 lead to serious deficits in management
and left a leadership vacuum at the Company. During the 2022 -2024 period, the
Company operated without consistent, skilled executive le adership with appropriate
turnaround expertise . This resulted in disorganized strategic planning,
underperformance and a failure to timeously respond to material changes in the
Company’s trading conditions . The culmination of these factors led to mounting
arrears on creditor accounts, the calling up of facilities by secured lender s, and
ultimately, the institution of liquidation proceedings , not only by the Bank but also by
an independent creditor, the South African Pork Producers Organisation. The Bank
also obtained an order to perfect a General Notarial Covering Bond under Bond N o.
BN 3[...] under case no 6620/2024 for the sheriff to attach movable assets of the
BN 3[...] under case no 6620/2024 for the sheriff to attach movable assets of the
Company.
[12] As part of the founding papers, Mr Leach dealt with the draft business rescue
plan (BR Plan) which, it is submitted by Mr Ziet sman SC , meets all the practical
requirements to satisfy a ‘reasonable prospect’ as defined in Oakdene Square
Properties (Pty) Ltd v Farm Bothasfontein (Kyalami) ( Pty) Ltd 1 (Oakdene Square).
The draft BR Plan, prepared by the proposed business rescue practitioners (BRPs),
purports the introduction of post -commencement finance (PCF), secured from Mr.
Craig Sumption (Mr Sumption), of R10 million under the auspices of s 135(3) (b) of
the Companies Act.
[13] Mr Leach contends that the Company’s business operations remain viable
and capable of rehabilitation , and business rescue would enable debt restructuring,
operational continuation and potentially a better outcome for creditors.
[14] In opposing the business rescue application on behalf of the Bank, Mr Van der
Merwe argued that the Bank is the Company’s single largest creditor and an affected
person as contemplated in the Companies Act. The Bank opposes the relief sought
on the basis that:
(a) the applicants have not made out a case on the papers for the relief which
they apply for;
(b) the evidence proffered by the applicants does not show that there are
reasonable prospects of the Company being rescued as contemplated in s 131(4) (a)
of the Companies Act; and
(c) a liquidation, as opposed to supervision , of the Company would be to the
advantage of creditors.
[15] The Bank’s contentions for opposing the commencement of business rescue
proceedings are, inter alia, the following: That the applicants have asserted that it is
just and equitable that the Company be placed under supervision for financial
reasons, i e a secondary fact , without advancing primary facts from which such
conclusions can be drawn. Similarly , the applicants have not advanced any primary
facts from which a conclusion can be drawn that there are reasonable prosects that
the Company could be rescued. In this rega rd it is argued that even though the
applicants allege that the 2022 Foot and Mouth Disease outbreak led to substantial
supply shortages, dram atic reduction in throughput, turnover and cash flow, there is
supply shortages, dram atic reduction in throughput, turnover and cash flow, there is
no primary evidence that the said disease had any e ffect whatsoever on the supply,
throughput or cashflow. No financial statements and proof of cattle purchases during
1 Oakdene Square Properties (Pty) Ltd v Farm Bothasfontein (Kyalami) (Pty) Ltd [2013] ZASCA 68;
2013 (4) SA 539 (SCA) (Oakdene Square) paras 29-31.
2022 and 2023 have been appended to the founding affidavit. On the contrary, so the
argument goes, the applicants own evidence shows that t he capacity utilisation for
2021 was 24%, for 2022 it was 25% and for 2023 it was 25%.
[16] Furthermore, t he averment that the bad debts in the amounts of R4 million
and R20 million caused further financial distress during 2023 lack credible primary
evidence to show that these amounts actually constitute ‘bad debts’. It is furthermore
contended that the claim that the Company was ‘over staffed’ and that a reduction in
the number of employees will significantly contribute to the reasonable prospect of
rescuing the Company, has no factual basis in that no evidence as to the number of
staff required for the processing of a specified number of units per hour, per day, per
week etc., has been provided by the applicants. Therefore, the applicants’ founding
affidavit is bereft of any evidence to the effect that the reduced number of staff,
whether it be 58 , 60 or 75 employees , will in fact be capable of processing the
number of animals required to meet the production forecast on which the applicants’
BR Plan is premised. It is contended that the Company is so hopelessly
commercially and factually insolvent th at no reasonable prospects exist that the
Company could be rescued and/or that a better return for creditors could be obtained
in business rescue as opposed to liquidation. The liquidation process has
progressed materially with the result that the timing o f the application for business
rescue is too late. Placing the Company under business rescue at this late stage
would prejudice creditors, delay asset realisation and diminish the available estate.
[17] Section 131(4) of the Companies Act provides that a court may make an order
placing a company under supervision and commencing business rescue
proceedings if the court is satisfied that:
(a) the company is financially distressed;
proceedings if the court is satisfied that:
(a) the company is financially distressed;
(b) the company has failed to pay over any amount in terms of an obligation
under or in terms of a public regulation, or contract, with respect to employment -
related matters; or
(c) it is otherwise just and equitable to do so for financial reasons and there is a
reasonable prospect of rescuing the company, or,
(d) it may dismiss th e application, together with any further necessary and
appropriate orders, including an order placing the company under liquidation.
[18] The definition of ‘business rescue’ in s 128(1)(b) of the Companies Act means:
proceeding to facilitate the rehabilitation of a company that is financially distressed
by providing for–
(a) the temporary supervision of the company, and of the management of its
affairs, business and property;
(b) a temporary moratorium on the rights of claimants against the company or in
respect of property in its possession; and
(c) the development and implementation, if approved, of a plan to rescue the
company by restructuring its affairs, business, property, debt and other liabilities,
and equity in a manner that maximises the likelihood of the company continuing in
existence on a solvent basis or, if it is not possible for the company to so continue in
existence, results in a better return for the company’s creditors or stakeholders than
would result from the immediate liquidation of the company.
[19] The threshold criterion for deciding whether an order placing a company into
business rescue is appropriate is whether there is a reasonable prospect of
achieving a rescue and to facilitate the conti nued existence of a company in a state
of solvency and, the secondary goal which is provided for as an alternative in the
event that the achievement of the primary goal proves not to be viable, is to facilitate
a better return for creditors and shareholder s of the company than would result from
immediate liquidation.2
[20] The concept of ‘reasonable prospects’ has been defined in Southern Palace
Investments 265 (Pty) Ltd v Midnight Storm Investments 386 Ltd3 as follows:
‘Whilst every case must be considered on its own merits, it is difficult to conceive of a rescue
plan in a given case that will have a reasonable prospect of success of the company
concerned continuing on a solvent basis unless it addresses the cause of th e demise or
failure of the company’s business, and offers a remedy therefor that has a reasonable
failure of the company’s business, and offers a remedy therefor that has a reasonable
prospect of being sustainable. A business plan which is unlikely to achieve anything more
than to prolong the agony, i.e. by substituting one debt for another without there being light
at the end of a not too lengthy tunnel, is unlikely to suffice. One would expect, at least, to be
given some concrete and objectively ascertainable details going beyond mere speculation in
the case of a trading or prospective trading company, of —
2 Koen and Another v Wedgewood Village Golf & Country Estate (Pty) Ltd 2012 (2) SA 378 para 14,
3 Southern Palace Investments 265 (Pty) Ltd v Midnight Storm Investments 386 Ltd [2011] ZAWCHC
442; 2012 (2) SA 421 (WCC).
24.1 the likely costs of rendering the company able to commence with its intended
business, or to resume the conduct of its core business;
24.2 the likely availability of the necessary cash resource in order to enable the ailing
company to meet its day -to-day expenditure, once its trading operations commence or are
resumed. If the company will be reliant on loan capital or other facilities, one would expect to
be given some concrete indication of the extent thereof and the basis o r terms upon which it
will be available;
24.3 the availability of any other necessary resource, such as raw materials and human
capital;
24.4 the reasons why it is suggested that the proposed business plan will have a
reasonable prospect of success.’4
[21] In Prospec Investments (Pty) Ltd v Pacific Investments 97 Ltd and Another5
(Prospec Investments) Van der Merwe J held as follows:
‘In my judgment it is not appropriate to attempt to set out general minimum particulars of
what would constitute a reasonable prospect in this regard. It also seems to me that to
require, as a minimum, concrete and objectively ascertainable details of the likely costs of
rendering the company able to commence or resume its business and the likely availabil ity
of the necessary cash resource in order to enable the company to meet its day to day
expenditure or concrete factual details of the source, nature and extent of the resources that
are likely to be available to the company, as well as the basis and term s on which such
resources will be available, is tantamount to requiring proof of a probability and unjustifiably
limits the availability of business rescue proceedings.’6
[22] The principles pronounced in Prospec Investments was confirmed in Oakdene
Square with reference to the express wording of s 128:
‘According to this section ‘rescuing the company’ indeed requires the achievement of one of
the goals in s 128(1)(b). Self-evidently the development of a plan cannot be a goal in itself. It
can only be the means to an end. That end, as I see it, must be either to restore the
company to a solvent going concern, or at least to facilitate a better deal for creditors and
shareholders than they would secure from a liquidation process. I have indicated my
agreement with the statement in Propspec that the applicant is not required to set out a
detailed plan. That can be left to the business rescue practitioner after proper investigation in
4 Ibid para 24.
5 Prospec Investments (Pty) Ltd v Pacific Investments 97 Ltd and Another [2012] ZAFSHC 130; 2013
(1) SA 542 (FB).
6 Ibid para 15.
terms of s 141. But the applicant must establish grounds for the reasonable prospect of
achieving one of the two goals in s 128(1)(b).’7
[23] On behalf of the applicants it is contended that the opposition to the
application is premised on the Bank’s lack of appreciation between the difference of
revenue and cashflow , and following on from this confusion, the Bank’s contention
that the PCF will be insufficient to pay the Company’s expenses until such time as it
starts generating revenue. Annexure FA11.1 to the BR Plan sets out the income
statement indicating that revenue is projected from the first month after commencing
with business rescue proceedings, referred to as Month One, and not only from
Month Five, as contended by the Bank. From Month Two, however the Company will
only become p rofitable. The inaccurate statement by the Bank is used to justify an
argument that the PCF will run out before the fifth month.
[24] An aspect raised by the Bank is t he amount owed to Centlec in respect of the
Company’s electricity account for the month of December 2024 , which amounted to
R2 922 556.90. As an abattoir, the Company by its very nature , requires a reliable,
uninterrupted supply of electricity to process and refrig erate meat products .
Electricity supply was disconnected during September 2024 ; Centlec indicated the
possibility of reconnecting the Company to the electrical grid if 10% of arrears are
paid. However, this would still require to Company to pay approximately R3 million to
Centlec within 12 months . This would be in addition to servicing its other monthly
indebtedness in amounts ranging between R394 595.32 and R693 748.59, in order
to prevent further disconnection of the electricity supply. This will be the situation
even if the Company only operates at 20% of its capacity . Accordingly, the Bank
contends that an amount ranging between R3 million to R4.5 million will have to be
contends that an amount ranging between R3 million to R4.5 million will have to be
expended in the first five months with the sole purpose of securing a constant supply
of electricity and will , in any event , be contingent on a decision by Centlec to
reconnect the electricity supply.
[25] In reply , Mr Leach explained that the Bank incorrectly assumes that the
electricity consumption at the abat toir is directly linked to the level of capacity
utilisation or production output. As part of the restructuring process, the Company will
implement a number of measures to improve energy efficiency and reduce fixed
7 Oakdene Square para 31.
costs. Previously, the largest portion of the Company’s electricity consumption was
attributable to the utilisation of two large compressors in the refrigeration plant which
maintained the cooling temperature of the cold rooms. On e such measure is the
deactivation of one of the two compressors. The remai ning compressor will be
sufficient to meet the reduced storage demand under the scaled back production
model proposed in the draft BR Plan. On behalf of the Company, it is contended that
this intervention alone will result in an estimated monthly electrici ty saving of
approximately R145 000. Mr Leach confirms in reply that there is an agreement with
Centlec to reconnect the Company’s electricity supply upon payment of a R250 000
reconnection fee and payment of the arear balance over a twelve-month period.
[26] The Bank contends that the plan that the BRPs will negotiate continued
facilities with the Bank will not succeed in that the Bank is not prepared to provide
any further credit or to make the facility available to the Company. The Senior
Manager8 submits that the manner in which the indebtedness to the Bank will be
dealt wit h, specifically a once -off payment of approximately R270 000 for the fleet
card facility and the recapitalization of arrears on vehicle and asset finance
agreements, with ongoing monthly payments, will be wholly insufficient. According to
the Bank the Company was unable to make payments of R250 000 per month in
reduction of the overdraft facilities. The proposition that it will be able to pay a total
amount of R1,5 million per month is regarded as ‘fanciful’ by the Bank. In any event,
the Bank, with a voting interest in excess of 30%, argues that it will not vote in favour
of the adoption of the proposed BR Plan.
[27] In the draft BR Plan, no additional credit facilities from the Bank are
contemplated. Reference is merely made to the retention of the existing transactional
contemplated. Reference is merely made to the retention of the existing transactional
banking infrastructure to support operations. However, given the Bank ’s refusal to
assist and cooperate with the proposals, the Company has indicted that it w ill utilise
alternative banking facilities held with Nedbank. Mr Sumption has committed to inject
R10 million in PCF to enable the commencement of slaughtering, processing and
sales while restoring the Company’s ability to meet essential o bligations, pay
employees and generate positive cashflow. An amount of R3.3 million is set aside for
8 Senior Manager: Business Support, Rescue and Recoveries, Personal Business Bank.
immediate payment of critical farmer suppliers to enable them to resume the supply
of animals to the abattoir.
[28] The contention that the balance of R6 .7 million will be sufficient to pay the
Company’s expenses until such time as it starts generating revenue from throughput
of animals and the sale of meat is criticised by the Bank as being insufficient. In this
regard, the month -by-month restart plan is set out in Annexure FA11.1 to the
founding affidavit and the income statement, Annexure D to the draft BR Plan. The
income statement sets out the revenue and expenses and not the cash -flow.
Revenue will be derived from immediate custo mer sales as forecast and will be
earned from Month One. In Month One, revenue of R8 344 000 is projected.
Monthly, from Month Two through to Month Five, revenue of R17 880 000 is
projected. From the revenue, direct product expenditure (costs payable to fa rmers
who supply livestock) , such as cost sales, are deducted. These are projected to be
R6 720 000 in Month One and R14 400 000 monthly, from Month Two to Month Five.
In addition, overhead costs must be deducted which results in an operating profit.
From the operating profit, expenses arising from business rescue activities are
deducted to reach a net profit or loss.
[29] The expected projected net loss in Month One of R12 359 434 is of an
accounting nature and not a cash flow loss. It is projected that profit will be
generated from Month Two, even though it is projected to be a small net profit up to
Month Five. On the other hand , the cash-flow projections from the statement, being
Annexure F to the BR Plan, are based upon a collection ratio of 65% of invoicing
collected in the same month and thereafter further collections of the balances at 30
and 60 days. The projected cash received from customers amounts to R6 283 104 in
Month One, R15 762 186 in Month Two, R20 738 817 in Month Three and
R20 562 500 in each of Months Four and Five.
R20 562 500 in each of Months Four and Five.
[30] According to the BRPs , whose calculations and contentions are supported by
Mr Leach, the total cash-flow will be more than sufficient to meet the projected cash -
flow expenses during Month One. It has to be kept in mind that the cash receipts will
be bolstered by a PCF receipt of R6 301 672 in Month One. The evidence presented
by the applicants shows that the draft BR Plan is premised on the Company’s
historical accounting data information for 2023 and 2024 , sound accou nting
principles and is furthermore supported by the confirmatory affidavit of Mr Steyn, one
of the proposed BRPs. Therefore, the Bank’s argument that revenue will only be
received from Month Five is evidently based on a failure to appreciate the differenc e
between revenue and cash flow.
[31] In the founding affidavit , Mr Leach states that the PCF will be advanced in
tranches, subject to performance milestones and operational oversight and will be
used to fund critical expenses such as the settlement of arrear utility accounts,
restocking, working capital needs and the commencement of trading. The Bank’s
argument that Mr Sumption has not agreed to advance the PCF to the Company in
business rescue unconditionally and that it can , therefore, only be assumed that
security will be required in the form of a notarial bond , appears to be unfounded. Mr
Sumption’s confirmatory affidavit is appended to the replying affidavit , confirming his
willingness and ability to provide a working capital facility of R10 million should the
Company be placed in business recue as PCF without requiring any security for the
PCF facility. Repayment of the PCF will only occur at the conclusion of the business
rescue process after all creditors have been paid and Mr Sumption’s claim will rank
in accordance with s 135 of the Companies Act.
[32] A further contention raised by the Bank is that Mr Sumption requires that he
must assume an executive oversight role working alongside the nominated BRPs . In
reply, this contention is placed in perspective in that Mr Sumption will offer his
financial expertise to support the Company’s turnaround, but that full management
and operational control will remain with the BRPs as prescribed by s 140 of the
Companies Act.
[33] The Company has obviously suffered reputational damage as a result of the
fact that creditors were not paid and the subsequent provisional liquidation order
issued during November 2024 . Mr Sumption was the Chief Financial Officer of a
issued during November 2024 . Mr Sumption was the Chief Financial Officer of a
business with a n annual turnover of R3 million and stated that his investment is
based on the fact that the facilities of the Company are world-class. He indicated that
with the correct production efficiencies implemented , the Company will deliver
sustainable value and g ood returns for any investor. According to him , the abattoir
was historically a good business and if production efficiencies had been in place
during the past four to five years, it would have been able to generate an average
profit, before tax, of approximately R10 million annually. Clearly, Mr Sumption has
investigated the cause of the demise of the Company and plans, with the full
management and input of the BRPs, to offer a remedy for the past insufficiencies.
[34] A further argument raised by the Bank is that the Company has not been
conducting business for approximately ten months and there is , therefore, no
business which can be rescued. Furthermore , no employ ees will be available to
revive the business having regard to the fact that an amount of R499 000 is
earmarked for retrenchment packages to 78 employees . However, appended to the
founding affidavit and referred to by Mr Leach, are letters of support and co mmercial
interest from key stakeholders across the supply - and customer chain expressing
support for the re -opening of the abattoir. Written commitments pertaining to the
supply of stock on a weekly basis clearly reflect that the Company, with the
assistance and financial expertise of both Mr Sumption and Mr Leach, will be able to
commence trading with a secured customer base and a reliable income stream. Mr
Sumption’s belief in the underlying strength of the Company , combined with his
commitment to invest both financially and strategically, makes him crucial to restoring
profitability and long -term sustainability. The letters of support confirm that the
quantities forecasted in the draft BR Plan are actually conservative and it appears
that, in all likelihood, the output would exceed the expected volumes. A positive
aspect raised in one of the letters of support is the complaint that the ‘competing
abattoir’ at Bloemfontein is presently not valued hig hly due to its price structure .
Farmers apparently travel long distances to other abattoirs to deliver stock. T he
excellent service provided by the staff of the Company is mentioned in the letters of
support and is, to my mind, a positive factor in support of rendering the Company
able to resume the conduct of its business.
able to resume the conduct of its business.
[35] The Company has the necessary certification to export meat products to
Africa, the Middle E ast and the Indian Ocean islands, and t he Company has the
highest certification for food safety management in place. The plan is to simplify the
business into a single meat type, namely beef, and become the lowest cost producer
of deboned beef trim product s for food service customers locally. The aim is ,
furthermore, to become a major supplier of ‘yellow fat’ biltong meat for biltong
manufacturers nationally. Due to the fact that the Company has export approval for
the rest of the world where South African red meat is accepted, for instance Hong
Kong and the Asia-Pacific markets, the further objective as explained in the draft BR
Plan is to expand on opportunities to export specific deboned beef products to Hong
Kong. A further objective is to obtain Halaal-certification to supply beef products to
the Western Cape, the Middle East and the Asia-Pacific markets. Future potential
clients have already been identified to open further growth opportunities.
[36] According to the information contained in the draft BR Plan, the South African
meat market is valued at R165 billion per annum. The red meat market continues to
show good growth locally as more consumers enter the middleclass sector and
migrate from plant protein to animal protein. The international market is showing a
similar trend and is expected to continue showing strong growth year on year as the
global population continues to increase and consumers from developing countries ,
like China and India , increase their annual per capi ta consumption of red meat.
Therefore, the future opportunities identified by the BRPs who, with the close
collaboration of Mr Sumption, aim to target these new export markets appear viable
and rather convincing. The fact is that food production remains a key growth industry
globally.
[37] Not only is the international market included in future business deals with the
Company, but i t is clearly stated in the draft BR Plan that the Company will initially
focus on existing customers to maximise the volumes b ehind these customers and
target quality approval from other selected beef trim customers identified by the
BRPs.
[38] In deciding whether there is a reasonable prospect of rescuing a company,
the court exercises a value judgment or, put differently, a wide discretion. The nature
of the court’s discretion under s 131 of the Act has been explained by Brand JA in
para 21 in Oakdene Square in the following terms:
para 21 in Oakdene Square in the following terms:
‘. . . I can now revert to the pertinent question: does s 131(4) afford the court a discretion in
the strict sense or not? I think the short answer is “no”. In a case such as this, the court’s
discretion is bound up with the question whether there is a reasonable prospect for rescuing
the company. The other pertinent requirement in s 131(4), namely, that the company must be
financially distressed, seems to t urn on a question of fact. As to whether there is a
reasonable prospect of rescuing the company, it can hardly be said, in my view, that it
involves a range of choices that the court can legitimately make; of which none can be
described as wrong. On the contrary, as I see it, the answer to the question whether there is
such a reasonable prospect can only be “yes” or “no”.’9
[39] Business rescue proceedings offer an opportunity to restore an ailing
company to financial health and functionality. In para 30 o f Oakdene Square it was
held that it was not practical nor prudent to be prescriptive on the way in which an
applicant must show a reasonable prospect in every case. Mr Zietsman SC
explained that the draft BR Plan appended to the founding affidavit is, in any event, a
revised pla n and depending on changing circumstances , further amendments and
adjustments may come in play in future in the event that the Company is placed in
business rescue and should the BR Plan be adopted . Business recue is intended to
serve public interest and t o avoid the deleterious consequences of liquidation in
cases where a reasonable prospect of salvaging the business of the company exists.
The proposed BRPs have investigated the Company’s affairs, the reasons for its
financial distress and financial situat ion and after having done so clearly consider
that there is a reasonable prospect of recuing the Company.
[40] Should the Company be placed in liquidation it would most probably take , at
the very least , between 24 and 36 months for creditors to receive a dividend. In the
business rescue scenario , secured creditors will receive payment in full whereas, in
the BRPs’ opinion in a liquidation scenario, the secured creditors will only receive
dividends to the value of their security after finalisation of the li quidation process. A
further aspect which remains an important consideration is that a number of the
employees support the application for the order to be granted as they do not wish to
lose their employment. The lease agreement is still in place; stock will be available
lose their employment. The lease agreement is still in place; stock will be available
from the supply and customer chain and the availability of the necessary cash
resources in order to enable the Company to meet its immediate day -to-day
expenditure has been secured. The nature and extent of the PCF available to the
Company has been adequately explained.
[41] I am satisfied that the applicants have placed before this C ourt a factual
foundation for the existence of a reasonable prospect that the desired object of
rescuing the Company can be achieved. The resumes for Mr Grobbelaar and Mr
9 Oakdene Square para 21.
Steyn are appended to the founding affidavit, and both are, according to the
information, seasoned business rescue practitioners with experience in operational
restructuring, data-driven decision-making and success in helping businesses regain
control of financial performance. The proposals put forward in the draft BR Plan are
not purely speculative in nature and consists of a positive plan to protect the interest
of a wider group of persons and to improve the prospects of the Company to being
returned to solvency and commercial viability. The draft BR Plan, to my mind, entails
a genuine attempt to achieve the aims of the remedy provided for in the Companies
Act. Regarding the declared intention of the Bank to oppose the BR Plan, it appears
that the applicants have accumulated facts and information pertaining to litigation
and information held by the Bank regarding the debt that has not been collected by
the Company and will, if need be, resort to the remedy provided for in s 153(1) (a)(ii)
of the Companies Act.
[42] On behalf of the applicants it is argued that the Bank’s opposition to the
application is mala fide and motivated by an ulterior purpose which justifies a cost
order on the scale as between attorney and client. I am not convinced that the
opposition to the urgent application for business rescue can be perceived as being
vexatious, unscrupulous, dilatory or mendacious. The return date issued during
November 2024 has been extended on numerous occasions, obviously in an attempt
to settle the dispute . Even subsequent to the hearing of the matter , a further period
was agreed u pon in an endeavour to come to an agreement. Obviously, the Bank
provided an opportunity to Mr Leach to come to some agreement in an effort to save
the Company back into solvency. To my mind, the leniency by the Bank in this regard
does not justify a punitive cost order.
[43] In my view it would be just and equitable to grant an order for the rescue of
[43] In my view it would be just and equitable to grant an order for the rescue of
the Company sought by the applicants rather than to liquidate the business as it may
be more prejudicial to the creditors. There is no reason why costs sh ould not follow
the result.
[44] In the result, the following order is made:
1 The application is heard urgently in terms of rule 6(12) and applicants’ failure
to comply with the forms, service and periods as provided for in the Uniform Rules of
Court is condoned.
2 The first respondent is placed under supervision and business rescue as
contemplated in s 131(4) of the Companies Act 71 of 2008.
3 Stephanus Johannes Marthinus Steyn and Jaco Grobbelaar are appointed
as business rescue practitioners of the first re spondent as contemplated in section
131(5) of the Companies Act 71 of 2008, with all the powers and duties entrusted to
them in terms of the Companies Act 71 of 2008 subject to ratification of such
appointments by the majority of the independent creditors’ voting interests at the first
meeting of the first respondent’s creditors.
4 Costs of this application, including the cost of counsel on Scale C shall be
paid by the intervening creditor, Standard Bank of South Africa Ltd
_______________________
I VAN RHYN
JUDGE OF THE HIGH COURT
Appearances
For the applicants: J Zietsman SC
Instructed by: Webbers Attorneys
Bloemfontein
For the intervening Creditor: R van der Merwe
Instructed by: Phatshoane Henney Attorneys
Bloemfontein