IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
Not reportable
Case no: 2758/2024
In the matter of:
ARNO LEON MCLEOD N O FIRST APPLICANT
CATHERINE MCLEOD N O SECOND APPLICANT
DANIEL DEKKER N O THIRD APPLICANT
(Cited in their capacity as trustees of the time being of The McLeod
Cape Family Trust, IT20762/2014)
and
INTERNATIONAL CHEMICAL SPECIALITIES (PTY) LTD FIRST RESPONDENT
[Registration Number 2014/114613/07]
RYNETTE PIETERS N O SECOND RESPONDENT
LIZANNE CHANTAL MULLER N O THIRD RESPONDENT
LEANNE LOMBAARD N O FOURTH RESPONDENT
KARIN DE BRAUWERE VAN STEELAND N O FIFTH RESPONDENT
(Cited in their capacity as the duly appointed joint final liquidators
of Hardware Initiative (Pty) Ltd (In Liquidation) (Master’s Reference No.
C157/2024))
JEAN FRANCOIS VAN NIEKERK SIXTH RESPONDENT
IN RE:
RYNETTE PIETERS N O FIRST APPLICANT
LIZANNE CHANTAL MULLER N O SECOND APPLICANT
LEANNE LOMBAARD N O THIRD APPLICANT
KARIN DE BRAUWERE VAN STEELEN N O FOURTH APPLICANT
(Cited in their capacity as the duly appointed joint final liquidators
of Hardware Initiative (Pty) Ltd (In Liquidation) (Master’s Reference No.
C157/2024))
JEAN FRANCOIS VAN NIEKERK INTERVENING APPLICANT
and
INTERNATIONAL CHEMICAL SPECIALITIES (PTY) LTD RESPONDENT
[Registration Number 2014/114613/07]
ARNO LEON MCLEOD N O FIRST INTERVENING RESPONDENT
CATHERINE MCLEOD N O SECOND INTERVENING RESPONDENT
DANIEL DEKKER N O THIRD INTERVENING RESPONDENT
(Cited in their capacity as trustees of the time being of The McLeod
Cape Family Trust, IT20762/2014)
Neutral citation: McLeod N O and Others v International Chemical
Specialities (Pty) Ltd and Others : In Re: Pieters NO and Others v International
Chemical Specialities (Pty) Ltd and Others (2758/2024) [2025] ZAFSHC 333 (24
October 2025)
Coram: VAN ZYL J
Heard: 6 March 2025
Delivered: This judgment was handed down electronically by circulation
to the parties’ representatives by e -mail and released to SAFLII. The time and
date of hand-down is deemed to be 15h00 on 24October 2025.
Summary: Application to place company under supervision and
commencing business rescue proceedings in terms of s 131(4) of the Companies
Act 71 of 2008 – determination of whether the company is financially distressed
and reasonable prospect s for rescuing the company – liquidation proceedings
which have already been commenced at the time when the application was made,
suspended in terms of s 131(6) – application granted – costs to be costs in the
business rescue.
ORDER
1 The first respondent (ICS) is placed under supervision and business rescue
proceedings in terms of s 131(4) of the Companies Act 71 of 2008 (the Act) , is
commenced.
2 Messrs Terry Morrison N O and David Stanley Hotz N O are appointed as
the first responden t’s (ICS) interim business rescue practitioners in terms of
s 131(5) of the Act.
3 The first respondent (ICS) is to notify each affected person of this order
within 5 (five) business days after the date of this order in terms of s 131(8)(b).
4 The first to third applicants` (the Trust’s) costs of the business rescue
application are to be costs in the business rescue, calculated at a scale as
between attorney and client.
5 The second to fifth respondents` (the liquidators) and the sixth respondent`s
(Mr Van Niekerk`s) costs of opposition to the business rescue application are to be
costs in the business rescue, calculated at a scale as between party and party,
with counsel`s fees calculated at scale B.
6 The liquidation application issued by the second to fif th respondents (as the
first to fourth applicants in the said liquidation application) (the liquidators) is
removed from the roll.
7 The liquidation application issued by the sixth respondent (as the intervening
applicant in the said liquidation applicati on) (Mr van Niekerk) is removed from the
roll.
8 The costs of the respective two liquidation applications stand over for later
adjudication.
JUDGMENT
Van Zyl J
[1] This matter commenced as a liquidation application brought by the duly
appointed provisional liquidators of Hardware Initiative (Pty) Ltd (in liquidation)
(Master’s Reference C157/2024) (Hardware) for the liquidation of International
Chemical Specialities (Pty) Ltd (Registration Number 2014/114613/07) (ICS). On
6 June 2024, Jean Francois van Niekerk (Mr van Niekerk) was granted leave to
intervene as the intervening applicant in the liquidation application. He holds 35
shares in ICS and is also a director. On the same date Arno Leon McLeod N O
(Mr McLeod), Catherine McLeod N O and Daniel Dekker N O, in their capaci ties
as the trustees for the time being of The McLeod Cape Family Trust
(IT20762/2024) (the Trust) were granted leave to intervene as the first, second
and third intervening respondents in the liquidation application . The Trust holds 65
shares in ICS and Mr McLeod is the only other director of ICS. The Trust opposed
the two liquidation applications and subsequently filed a counter -application for
ICS to be placed under supervision and commencing business rescue in terms of
s 131(4) of the Companies Act 71 of 2008 (the Act). The liquidators of Hardware
and Mr van Niekerk are opposing the said application for business rescue and are
persisting with their applications for liquidation of ICS.
[2] In the alternative to the liquidation of ICS, Mr van Niekerk is seeking relief in
terms of s 163 of the Act that the Trust be directed to purchase his 35%
shareholding which he holds in the respondent at a fair value.
The citing of the parties and legal representation
[3] In the process of the intervention of some of the parties and the filing of the
respective affidavits, the citing of the parties has been different in the headings of
the respective affidavits. I deem it apposite to cite them as set out in the heading
of this judgment.
[4] As already indicated, for ease of reading, I will refer to the parties in the body
of the judgment as follows:
(a) The liquidators;
(b) The Trust;
(c) ICS;
(d) Mr McLeod; and
(e) Mr van Niekerk.
[5] The legal representative of the Trust is Ms McChesney, of the liquidators
Ms Cowlin and of Mr van Niekerk, is Mr Crookes.
Service and notice of the business rescue application
[6] Section 131(2) of the Act determines as follows:
‘(2) An applicant in terms of subsection (1) must –
(a) serve a copy of the application on the company and the Commission; and
(b) notify each affected person of the application in the prescribed manner.’
[7] When the matter initially served before me, the point was raised by Ms
Cowlin and Mr Crookes that proper service and notice had not been effected on all
affected persons. Ms McCowley conceded same.
[8] In the matter of Lutchman NO v African Global Holdings 1 the Supreme Court
of Appeal, with reference to para 11.3 of Taboo Trading 232 (Pty) Ltd v Pro Wreck
Scrap Metal CC; Joubert v Pro Wreck Scrap Metal CC 2013 (6) 141 (KZP), held at
paras 38 and 39 as follows:
‘[38] Each affected person — a shareholder or creditor of the company in liquidation, any
registered trade union representing employees of that company or each of the individual
employees — is entitled to oppose or support the business rescue application. That
necessarily follows from the right afford ed to each of them in terms of s 131(3) to
participate in the hearing of the business rescue application. Each should have been
notified of the business rescue application in terms of s 131(1) (b) in the prescribed
manner.
[39] The service and notification requirements set out in s 131(2) of the Companies Act
are not merely procedural steps . According to Taboo, “[t]hey are substantive
requirements, compliance with which is an integral part of making an application for an
order in terms of s 131(1) of the Companies Act ”. Strict compliance with those
requirements is required because business rescue proceedings can easily be abused. ’
(My emphasis.)
[9] After hearing some arguments from the respective legal representatives and
[9] After hearing some arguments from the respective legal representatives and
discussions in open cour t, it was suggested that the application for business
rescue be postponed in order for the Trust to rectify and supplement the service
1 Lutchman N.O. and Others v African Global Holdings (Pty) Ltd and Others; African Global
Holdings (Pty) Ltd and Others v Lutchman N.O. and Others [2022] ZASCA 66; [2022] 3 All SA 35
(SCA); 2022 (4) SA 529 (SCA).
issues and that leave be granted to the Trust to file supplementary papers in this
regard. The Trust tendered the wasted costs occasioned by the postponement.
[10] Section 131(6) of the Act provides as follows:
‘(6) If liquidation proceedings have already been commenced by or against the
company at the time an application is made in terms of subsection (1) , the application will
suspend those liquidation proceedings until –
(a) the court has adjudicated upon the application; or
(b) the business rescue proceedings end, if the court makes the order applied for.’
[11] The application for business rescue therefore has to be adjudicated first.
However, for the sake of practical efficacy, I suggested that all three applications
be postponed to the same date so that arguments on the two liquidation
applications can also be entertained . In that way, should the business rescue
application not be successful, I can adjudicate the liquidation applications. I
consequently made the following order:
‘1. The application for liquidation by the liquidators, the appli cation for liquidation or
alternative leave by Mr van Niekerk and the business rescue application are postponed to
6 March 2025 at 09h30 to be argued and heard simultaneously, which hearing shall be
heard virtually.
2. Leave is granted to the trust to sup plement its papers in the business rescue
application in respect of service and notification in terms of section 131(2)(b) of the
Companies Act, 71 of 2008.
3. The trust is also to comply with the mentioned section 131(2)(b) in respect of the
aforesaid supplementary papers and this order.
4. The liquidators’ report with its annexures, dated 10 February 2025, is to be
considered pro non scripto for purposes of the present applications.
5. All supplementary heads o f argument, if any, are to be filed on or before 12h00 on
Friday, 28 February 2025.
6. The trust is to pay the wasted costs occasioned by the postponement, counsel’s
fees to be taxed on scale B.’
fees to be taxed on scale B.’
[12] During the hearing of the business rescue applicatio n on the aforesaid
postponed date, the parties were ad idem that the deficiencies in respect of the
service and notice of the application had been duly rectified and that the
application was consequently ripe for hearing.
[13] As previously explained I subsequently entertained arguments by all three
legal representatives on the merits of all three applications. However, considering
the aforesaid provisions of section 131(6) I will start off by dealing with the
business rescue application.
THE BUSINESS RESCUE APPLICATION:
Background
[14] These proceedings are set against the background of interrelated entities of
which ICS forms part (‘the Group’). In addition to ICS the Group includes:
(a) Hardware Initiative (Pty) Ltd (in voluntary liquidation) (‘Hardware’);
(b) Organic Synthesis (Pty) Ltd (in provisional liquidation) (‘OS’);
(c) African Chemical Holdings (Pty) Ltd (in provisional liquidation) (‘ACH’); and
(d) Hardings Proprietary Products CC (in final liquidation) (‘HPP’).
[15] Each entity of the Group has the same two directors (and effectively)
shareholders, namely Mr van Niekerk and Mr McLeod, with Mr McLeod’s shares
being held either in his personal capacity or via the Trust. Each of them carried on
business, either as actively trading entities or in anc illary roles, in the chemical
manufacturing industry.
[16] The Group has a long history of inter -company loan accounts where
amounts due and owing on the various entities’ trade accounts for the supplier of
materials inter se would be captured as credits and debits on the inter -company
loan accounts.
[17] The liquidators of Hardware are now pursuing the alleged inter -company
loan accounts between the various entities within the Group, hence the liquidation
application against ICS.
[18] The application for the liquidation of ICS is on the basis that it is unable to
make payment of its debts as and when they fall due for payment in the ordinary
course of its business, as contemplated in terms of s 344(f), as read with s
345(1)(c) of the Companies Act 61 of 1973, and item 9 of Schedule 5 to the Act
(2008). According to Hardware , ICS is indebted to Hardware in an amount of at
(2008). According to Hardware , ICS is indebted to Hardware in an amount of at
least R611 920.06 (plus interest and costs), which is currently due, owing and
payable by ICS to Hardware ( ‘the debt’). According to the liquidators the debt
arises from monies loaned and advanced by Hardware to ICS on debit loan
account at the latter’s special instance and request. Hardware holds no security
for this alleged claim against ICS. Their case is therefore one of deemed
insolvency.
[19] Mr van Niekerk is seeking the liquidation of ICS on consideration of justice
and equitability, alternatively based on Section 163 of the Act.
[20] During June 2024, Nedbank has pulled its credit facilities an d has called on
payment of all its loans by the entities within the Group, including ICS. It has also
frozen the bank accounts of ICS. According to the Trust notwithstanding the
solvency of ICS to date, the result of Nedbank’s actions has led ICS into fi nancial
distress. A copy of Nedbank’s letter of demand is attached to the founding
affidavit of the Trust in the counter -application as Annexure ‘BR8’. In terms
thereof, the outstanding balance on the overdraft facility of ICS was
R2 069 731.33, plus finance charges and interest, which was to be paid within 10
business days from the date of the letter.
[21] According to the Trust, Nedbank has called up its facilities across all the
entities within the Group, not due to the performance of ICS per se, but due to the
financial issues within the Group as a whole, in particular the demise and the
winding up of the other entities referred to earlier. Each company within the Group
has bound itself as surety and co -principal debtor for the facilities acros s the
Group. According to the Trust, the totality of the Group’s exposure to Nedbank is
R17.9 million.
[22] Aside from the issue with Nedbank, it appears to be common cause between
the parties that the relationship between Mr van Niekerk and Mr McLeod has
deteriorated to the point that they can no longer sensibly do business together.
Their ailing relationship has had a negative knock -on effect on the performance of
Their ailing relationship has had a negative knock -on effect on the performance of
ICS. According to the Trust it had become increasingly difficult to pass necessary
resolutions to turn around certain aspects of the business.
[23] It is the Trust’s case that there are consequently only two causes for the
financial distress of ICS at this stage, namely the call up of the overdraft facility by
Nedbank and, secondly, the f ailed relationship between Mr van Niekerk and Mr
McLeod.
Statutory provisions
[24] In terms of s 131(1) of the Act, unless the company has adopted a resolution
contemplated in s 129, an affected person may apply to a Court at any time for an
order placing the company under supervision and commencing business rescue
proceedings.
[25] An ‘affected person’ in relation to a company includes a shareholder of the
company, as defined in s 128(1)(a)(i) of the Act.
[26] ‘Business rescue’ is defined in s 128(1)(b) of the Act to mean the following:
‘. . . proceedings to facilitate the rehabilitation of a company that is financially distressed
by providing for –
(i) the temporary supervision of the company, and of the management of its affairs,
business and property;
(ii) a temporary moratorium on the right s of claimants against the company or in
respect of property in its possession; and
(iii) the development and implementation, if approved, of a plan to rescue the company
by restructuring its affairs, business property, debt and other liabilities, and equi ty in a
manner that maximizes 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 than would result from the immediate
liquidation of the company.’
[27] ‘Financially distressed’ is defined in s 128(1)(f) of the Act:
‘. . . in reference to a particular company at any particular time, means that –
(i) it appears to be 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
(ii) it appears to be reasonably likely that the company will become insolvent within the
(ii) it appears to be reasonably likely that the company will become insolvent within the
immediately ensuing six months.’
[28] In relation to the adjudication of a business rescue application by the Court,
s 131(4) of the Act determines as follows:
‘(4) After considering an application in terms of sub-section (1), the court may –
(a) make an order placing the company under supervi sion and commencing business
rescue proceedings, if the Court is satisfied that –
(i) the company is financially distressed;
(ii) the company has failed to pay over any amount in terms of an obligation
under or in terms of a public regulation, or contrac t, with respect to
employment-related matters, or
(iii) it is otherwise just and equitable to do so for financial reasons,
and there is a reasonable prospect for rescuing the company, or
(b) dismissing the application, together with any further necessary and appropriate
order, including an order placing the company under liquidation.’
[29] In terms of s 128(1)(h) ‘rescuing the company’ means achieving the goals set
out in the definition of ‘business rescue’ in s 128(1)(b).
Abuse of process
[30] A court will not grant a business rescue application if it constitutes an abuse
of process. In this regard both Ms Cowlin and Ms McChesney referred in their
heads of argument to the matter of PFC Properties (Pty) Ltd v Commissioner for
the Sou th African Revenue Service and Others 2 where the Supreme Court of
Appeal confirmed that the purpose of business rescue proceedings is aimed at
restoring a company to solvency, and are not to be abused by a company with no
prospects of being rescued but ma inly to avoid a winding -up or to obtain some
respite from creditors. With reference to the judgment in Villa Crop Protection (Pty)
Ltd v Bayer Intellectual Property GmbH3 the court also warned that that a business
rescue application should not be brought with an ulterior motive.
[31] In the matter of Van Staden and Others NNO v Pro -Wiz (Pty) Ltd ,4 it was
held as follows:
‘. . . It has repeatedly been stressed that business rescue exists for the sake of
rehabilitating companies that have fallen on hard times but are capable of being restored
rehabilitating companies that have fallen on hard times but are capable of being restored
to profitability or, if that is impossible, to be employed where it will lead to creditors
receiving an enhanced dividend. Its use to delay a winding up, or to afford an opportunity
2 PFC Properties (Pty) Ltd v Commissioner for the South African Revenue Service and Others
[2023] ZASCA 111; 2024 (1) SA 400 (SCA) para 27.
3 Villa Crop Protection (Pty) Ltd v Bayer Intellectual Property GmbH [2022] ZACC 42; 2023 (4)
BCLR 461 (CC).
4 Van Staden and Others NNO v Pro-Wiz (Pty) Ltd [2019] ZA SCA 7; 2019 (4) SA 532 (SCA)
to those who were behind its business operations not to account for stewardship , should
not be permitted.’5
Reasonable prospect for rescuing the company
[32] As mentioned earlier, with reference to s 131(4) of the Act, an applicant must
satisfy the court that there is a reasonable prospect for rescuing the company.
[33] In Oakdene Square Properties (Pty) Ltd v Farm Bothasfontein (Kyalami)
(Pty) Ltd6 (Oakdene) the following principles were determined in this regard:
‘[29] This leads me to the next debate which revolved around the meaning of ‘a
reasonable prospect’. As a starting point, it is generally accepted that it is a lesser
requirement than the ‘reasonable probability’ which was the yardstick for placing a
company under judicial management in terms of s 427(1) of the 1973 Companies Act (see
eg Southern Palace Investments 265 (Pty) Ltd v Midnight Storm Investments 386
Ltd 2012 (2) SA 423 (WCC) para 21). On the other hand, I believe it requires more than a
mere prima facie case or an arguable possibility. Of even greater significance, I think, is
that it must be a reasonable prospect – with the emphasis on ‘reasonable’ – which means
that it must be a prospect based on reasonable grounds. A mere speculative suggestion
is not enough. Moreover, because it is the applicant who seeks to satisfy the court of the
prospect, it must establi sh these reasonable grounds in accordance with the rules of
motion proceedings which, generally speaking, require that it must do so in its founding
papers.’7
[34] In Prospect Investments v Specific Coast Investments 97 Ltd and Another8
it was held as follows:
‘[11] I agree that vague averments and mere speculative suggestions will not suffice in
this regard. There can be no doubt that in order to succeed in an application for business
rescue, the applicant must place before the Court the factual foundation for the e xistence
of a reasonable prospect that the desired object can be achieved. But with respect to my
of a reasonable prospect that the desired object can be achieved. But with respect to my
learned colleagues, I believe that they place the bar too high.
. . .
[15] 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
5 Ibid para 22.
6 Oakdene Square Properties (Pty) Ltd v Farm Bothasfontein (Kyalami) (Pty) Ltd [2013] ZASCA 68
(Oakdene).
7 Ibid para 29
8 Prospect Investments v Specific Coast Investments 97 Ltd and Another [2012] ZAFSHC 130;
2013 (1) SA 542 (FB)
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, a nd the
likely availability 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
resources that are likely to be available to the company as well as the basis and terms on
which such resources will be available, is tantamount to requiring proof of a probability,
and unjustifiably limits the availability of business rescue proceedings.’9
[35] In Oakdene, it was confirmed that:
‘[31] 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 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).’10
The replying affidavit
[36] At the outset I have to deal with a point raised by both Ms Cowlin and Mr
Crookes, namely that the Trust has not made out a proper case in its founding
affidavit in the counter -claim and then introduced new matter in its replying
affidavit not dealt with in its founding papers or expanding upon aspects of its case
in the founding affidavit. In this regar d it is trite that an applicant must make out its
case in the founding affidavit and save in exceptional circumstances, an applicant
is not permitted to make out a new case, or introduce new matter or new grounds,
in reply.
[37] Ms McChesney submitted tha t although there is a degree of new matter in
the replying affidavit, it is mostly in respect of financial information which was not
yet available at the time of the filing of the founding affidavit and further in
response to issues that were raised in the answering affidavits of the liquidators
response to issues that were raised in the answering affidavits of the liquidators
and Mr Van Niekerk , which were not dealt with in the founding affidavit and which
the Trust therefore had to respond to in reply. She submitted that in these
circumstances new matter is allowed in reply. Ms McChesne y further submitted
that the liquidators and Mr Van Niekerk have not been prejudiced in the
circumstances, otherwise they could and probably would have exercised one of
the available remedies by having filed a rule 30 application, an application to strike
9 Ibid paras 11 and 15.
10 Oakdene fn 6 para 31.
out or an application in terms of rule 6(5)(e) for permission to file a fourth set of
affidavits in order to respond to the alleged new matter complained of.
[38] I agree with the submissions by Ms McChesney. It is evident that certain
relevant financial information was not yet available at the time of the filing of the
answering affidavit. The other so -called ‘new matter’ emanated from averments
made in the answering affidavits to which the Trust considered it necessary to
respond. In the matter of eBotswana (Pty) Ltd v Sentech (Pty) Ltd and
Others11 the court held as follows at paras 28 and 29:
‘The short answer is that in view of the contents of the answering affidavit it was well
within the ordinary procedural rules for the applicant to respond by introducing further
corroborating facts. Even if certain of the averments could have been made in the
founding affidavit, on its own that is no basis for excluding it from consideration. It is
evident that Sentech would not have been able to challenge the averment or document
produced. A common -sense approach based on want of prejudice precludes their
exclusion from consideration. Mr Budlender referred to two cases in point: Hidro-Tech
Systems (Pty) Ltd v City of Cape Town and Others 2010 (1) SA 483 (C) in para 81;
and Smith v KwaNonqubela Town Council 1999 (4) SA 947 (SCA) ([1999] 4 All SA 331) in
para 15.
Accordingly the application to strike out on this ground is dismissed.’
[39] In the circumstances there is no preju dice for the liquidators or Mr Van
Niekerk. The issues are now properly ventilated. It is in the interest of justice that
the totality of the replying affidavit be considered in the adjudication of the
application.
Financial position of ICS:
[40] The application for business rescue is being opposed by the liquidators
mainly on three grounds, namely that the application is an abuse of process, there
is no reasonable prospect of rescuing ICS and that ICS is not suited for business
is no reasonable prospect of rescuing ICS and that ICS is not suited for business
rescue. One of the main contentions by the liquidators is that ICS has initiated
business rescue proceedings to avoid paying Nedbank and its other cr editors
indefinitely and that it therefore constitutes an abuse of process.
11 eBotswana (Pty) Ltd v Sentech (Pty) Ltd And Others [2012] ZAGPJHC 231; 2013 (6) SA 327
(GSJ).
[41] In the founding affidavit filed in the counter -application the Trust relies upon
the annual financial statements of ICS for the financial year ending February 2022
as comp iled by the company auditors , Grant Maddock & Co. At the time of the
filing of the founding affidavit, the annual financial statements for the financial
years ending February 2023 and February 2024 were not yet available.
[42] At paras 52 and 53 of the founding affidavit , the Trust sets out the following
information as evident from the annual financial statements:
’52.1 The respondent has a total asset value of R43 515 623.00;
52.2 The respondent’s total liabilities are R22 792 516.00;
52.3 The respondent’s nett equity (or “free residue”) as at the end of the 2022 financial
year was R20 723 170.00;
52.4 Total sales for the year was R93 928 645.00;
52.5 The gross profit for the year was at R27 035 825.00; and
52.6 The nett profit for the year was R79 531.00.
53. The nett profit for the preceding financial years as per the annual financial
statements, duly signed off by the directors, were as follows:
53.1 February 2018 – R8 122 614.00;
53.2 February 2019 – R4 441 986.00;
53.3 February 2020 – R1 122 648.00.’
[43] The following figures are set out in para 56 of the founding affidavit as per
the most recent management accounts available at the time:
’56.1 Between March 2023 and February 2024 the respondent had a total revenue of
R36 239 186.05;
56.2 During said period, the nett profit was R4 852 926.37;
56.3 During the period March 2024 to July 2024 being a period of only five months, the
respondent had a revenue of R10 599 216.29; and
56.4 During the aforesaid five-month period, the respondent had a nett profit of
R1 945 554.06 before tax.’
[44] From the more recent management accounts attached to the replying
affidavit, it appears that ICS showed a trade profit of R4 850 000.00 for the 2024
financial year, wit h an average monthly profit of around R4 111 000.00 for the
three months immediately preceding Mr McLeod deposing to the replying affidavit
and a net profit of R3.7 m over the past 8 months preceding Mr McLeod deposing
to the replying affidavit.
[45] Despite Mr Van Niekerk`s averments in his answering affidavit that the
management accounts/financial records of ICS are unreliable, when read in
context of the responses thereto in the replying affidavit, it is evident that these
averments are unsubstantiated.
[46] With reference to the current trade debtors and creditors the Trust set out the
respondent’s accounts payable as at 5 August 2024 with explanatory notes in
respect of the respective accounts. The Trust then concludes as follows at paras
61 to 63 of the founding affidavit:
’61. Disregarding the disputed claim of SAUPA and that of ACH, the trade creditors are
at R1 506 463.18. Juxtapose to the trade receivables of at least R2 652 925.88 and the
court will note that the respondent has positive cashflow.
62. It is telling that none of the respondent’s creditors have take n any legal action
against the respondent so far, aside from the Second, Third and Fourth Respondents
herein, who are not, I submit, usual “trade creditors”.
63. The Respondent is for all intends and purposes, so far at least, factually and
commercially solvent.’
[47] In response to Mr Van Niekerk dealing with the debtors and credito rs of the
Trust in his answering affidavit, the Trust responded in detail thereto in the
replying affidavit.
[48] It is accordingly the case of ICS that it is factually and commercially solvent,
but that Nedbank’s actions and the failed relationship with Mr van Niekerk have
led ICS to be in financial distress. According to the Trust ICS is, and always has
been, a lucr ative company. ICS has a healthy balance sheet and a positive cash
flow.
Sale of the ACH and OS assets
[49] According to Mr McLeod he and Mr van Niekerk agreed as long ago as 2022
that the ACH properties should be sold. The intention has always been to use the
sale proceeds to settle the Group’s facilities with Nedbank. Although Mr Van
Niekerk in his answering affidavit admits this, he contends that there is little
prospect that the ACH properties are going to realize enough to settle all of the
Nedbank debt, let alone the other creditors.
[50] According to Mr van Niekerk, the totality of the Group’s exposure to Nedbank
is R19 440 303.06. In the founding affidavit the Trust attached a summary of the
Nedbank loans on which basis the Trust alleges that the totality of the Group’s
exposure to Nedbank is R17.9 million.
[51] It is the Trust’s case that through the sale of the assets of ACH and OS,
Nedbank’s claim will be entirely extinguished or at least greatly reduced. The Trust
refers to actual offers received on ACH’s properties for the ChemCity and Naledi
Properties in a cumulative value of R19 000 000.00. More recent offers, or
potential offers, that came to light af ter deposing to the founding affidavit have
been disclosed in the replying affidavit, including interest in the OS assets of
around R4 000 000.00. Given the liquidation of both ACH and OS, the sale of the
assets is imminent.
[52] The aspect raised by M r Van Niekerk that ICS conducts its business from
one of the properties of ACH which, according to the Trust, stands to be sold, was
not only a known fact to all relevant parties, but the Trust furthermore duly
addressed the issue in its replying affidavit . ICS occupies ACH`s property at
Naledi. If the property cannot be sold tenanted so that ICS can continue with its
operations from there, ICS will have to relocate, which is not fatal to ICS.
[53] Mr Van Niekerk alleged in his answering affidavit that ICS does not pay
rental to ACH in respect of the aforesaid property, is completely contradicted by
rental to ACH in respect of the aforesaid property, is completely contradicted by
the Trust`s evidence in its replying affidavit from which it is evident that ICS made
monthly payments to ACH sufficient to cover the mont hly instalments of the
mortgage bond, which constituted inflated ‘rental amounts’ which were not market
related.
[54] In the founding affidavit the Trust, at para 81 thereof, sets out the
advantages which will follow from placing the Trust under business rescue and
appointing a business rescue practitioner (‘BRP’). (There appears to be some
references to the incorrect parties, but the substance of the averments stil l
stands):
’81.1 The Second to Fourth Respondents’ liquidation application will be stayed;
81.2 Any collection action by Nedbank will be suspended;
81.3 There will be a general moratorium on claims from creditors;
81.4 The BRP can make decisions on behalf of the First Respondent without the need for
Fourth Respondent and I to co-operate;
81.5 The First Respondent will be given time to reap the benefits of its restructuring and
ACH will have time to sell the properties at the best possible value to settle Nedbank in
full and to settle the First Respondent’s loan of over R4M;
81.6 The BRP will be able to take action against ACH, including an application to place it
under business rescue so as to garner control over the sale of t he properties, should it
deem it necessary (bearing in mind that the First Respondent is a creditor of ACH and
hence an “affected person”; and
81.7 Third party financers, such as Paragon Lending who specialises in post -
commencement finance and whom have al ready expressed an interest in possibly
providing such finance to the Respondent, can advance rescue lending to the First
Respondent with the protection of their loans being treated as “super preferred” in the
case of liquidation.’
Conclusion
[55] I have duly considered all the evidence and the submissions made by the
respective legal representatives. I am satisfied that ICS is financially distressed
and there is a reasonable prospect for rescuing ICS. I am consequently also
satisfied that the business re scue does not constitute an abuse of the court
process.
[56] The rescue plan is not speculative or unfounded. It is evident that the sale of
[56] The rescue plan is not speculative or unfounded. It is evident that the sale of
the assets of ACH and OS is a certainty. The values these sales are to achieve is
underpinned by actual offers to purchase and letters of intent attached to the
Trust’s papers. If the sale of the ACH and OS assets does not have the effect of
rescuing ICS, it will probably have the effect of greatly increasing the dividend
payable to its creditors and shareholders over time.
[57] The application for placing ICS under supervision, thereby commencing
business rescue proceedings as set out in the counter-application, is consequently
to be granted.
The proposed business rescue practitioners
[58] The Trust applies that Terry Morrison NO of Terry Morrison Consulting and
David Hotz N O be appointed as the business rescue practitioners. According to
the Trust they have extensive experience in liquidations, turn -arounds and
business rescue proceedings. The y are duly registered business rescue
practitioners and, according to the Trust, in all respects, comply with the
requirements of the Act.
[59] It is consequently evident that the proposed business rescue practitioners
are fit and proper persons to be ap pointed. They have also consented to the said
appointment.
Costs of the business rescue application
[60] In the business rescue application the Trust is seeking an order that costs be
ordered against any such party opposing the application.
[61] In Meskin, Insolvency Law , at 18 -54(17), para 18.8.2.1, the following is
stated with reference to the matter of Cape Point Vineyards (Pty) Ltd v Pinna cle
Point Group Ltd and Others:12
‘Although the phrase “and other claims arising out of the costs of the business rescue
proceedings” in section 135(3) is not defined or clarified anywhere in the Companies Act
2008, it is submitted that these expenses will include all costs that are necess arily
incurred in the running of the company under the business rescue process, including the
costs incurred in bringing an application to place the company under supervision in terms
of section 131.’
[62] In the aforesaid judgment the court also held, a t paras 9 and 10, that such
costs should be taxed on attorney and client scale.
12 Cape Point Vineyards (Pty) Ltd v Pinnacle Point Group Ltd and Others [2011]
ZAWCHC 306, 2011 (5) SA 600 (WCC).
[63] Therefore, although the liquidators and Mr Van Niekerk opposed the
business rescue application, I am of the view that the Trust`s costs of the
application on an attorney and client scale are to be costs in the business rescue.
[64] I further find the opposition of the business rescue application to have been
reasonable, in which circumstances I consider it fair and reasonable that the costs
of the opposition to the application, also be costs in the business rescue, but
which costs are to be taxed on a party and party scale.
The two liquidation applications
[65] As indicated earlier in the judgment, the two liquidation applications were
postponed to the same date as the application for business rescue. However, in
terms of s 131(6) the liquidation applications were suspended. In terms of this
judgment I am granting the application for business rescue. I have therefore not
adjudicated the two liquidation applications a s such and in view of the granting of
the business rescue application, I am not to adjudicate them at this stage either.
[66] The alternative relief being sought by Mr Van Niekerk in his application for
the liquidation of ICS, is exactly that – relief in the alternative, should I find that a
proper case has not been made out for the granting of a liquidation order on the
basis th at it is just and equitable for it to be wound up . Mr Van Niekerk in fact
again accentuated at paragraph 11 of his answering affidavit filed in opposition to
the business rescue application as follows:
‘Save to stress that the basis upon which I support th e winding up relief sought by the
liquidators is based both on section 163 and the just and equitable ground of winding up,
and that the valuation relief is sought only in the event that the court finds that it is not
just and equitable to wind up ICS . . .’ (His emphasis)
[67] In my view I can therefore not consider or grant the alternative relief at this
[67] In my view I can therefore not consider or grant the alternative relief at this
stage before the main relief, namely the application for the liquidation of ICS , has
not been adjudicated, despite the fact that the Trust consents to the granting of the
alternative relief.
[68] However, in view of the fact that the two liquidation applications are currently
still on the roll, I need to make an order in respect of them. In the circumstances I
deem it apposite that the two a pplications merely be removed from the roll, costs
to stand over.
Order
[69] The following order is made:
1 The first respondent (ICS) is placed under supervision and business rescue
proceedings in terms of s 131(4) of the Companies Act 71 of 200 8 (the Act), is
commenced.
2 Messrs Terry Morrison N O and David Stanley Hotz N O are appointed as
the first respondent’s (ICS) interim business rescue practitioners in terms of
s 131(5) of the Act.
3 The first respondent (ICS) is to notify each affected person of this order
within five business days after the date of this order in terms of s 131(8)(b).
4 The first to third applicants` (the Trust’s) costs of the business rescue
application are to be costs in the business rescue, calculated at a scale as
between attorney and client.
5 The second to fifth respondents` (the liquidators) and the sixth respondent`s
(Mr Van Niekerk`s) costs of opposition to the business rescue application are to be
costs in the business rescue, calculated at a scale as between party and party,
with counsel`s fees calculated at scale B.
6 The liquidation application issued by the second to fifth respondents (as the
first to fourth applicants in the said liquidation application) (the liquidators) is
removed from the roll.
7 The liquidation application issued by the sixth respondent (as the intervening
applicant in the said liquidation application) (Mr van Niekerk) is removed from the
roll.
8 The costs of the respective two liquidation applications stand over for later
adjudication.
______________________
C VAN ZYL
JUDGE OF THE HIGH COURT
Appearances:
For the first to third applicants: MA McChesney
Instructed by: Potgieter & Associates
c/o Webbers Attorneys, Bloemfontein
For the second to fifth respondents: AH Cowlin
Instructed by: Duvenhage & De Villiers Attorneys
c/o Symington & de Kok, Bloemfontein
For the sixth respondent: T Crookes
Instructed by: Abrahams & Gross
c/o Honey Attorneys, Bloemfontein.