IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
Case number: 2025-173474
In the matter between:
TAMELA MEZZANINE DEBT FUND I PARTNERSHIP Applicant
(en commandite partnership)
And
KT WASH DETERGENTS PROPRIETARY LIMITED First Respondent
(in business rescue)
(Registration number: 2018/040804/07)
STEPHEN ULYSSES SMYTH N.O. Second Respondent
(in his capacity as a duly appointed joint business rescue
practitioner of the first respondent)
[1] REPORTABLE: YES
[2] OF INTEREST TO OTHER JUDGES: YES
[3] REVISED: NO
SIGNATURE DATE: 12 DECEMBER 2025
~ -,.,,.,,~~~~ ._ii
~y
2
ALISON MARY TIMME N.O. Third Respondent
(in her capacity as a duly appointed joint business rescue
practitioner of the first respondent)
TALIRA NAIDOO N.O. Fourth Respondent
(in her capacity as a duly appointed joint business rescue
practitioner of the first respondent)
AECI LIMITED Fifth Respondent
CHEP SOUTH AFRICA PROPRIETARY LIMITED Sixth Respondent
CIM CHEMICALS PROPRIETARY LIMITED Seventh Respondent
DBC PACKAGING PROPRIETARY LIMITED Eight Respondent
DYASON INC Ninth Respondent
EKANGO SALT REFINERS PROPRIETARY LIMITED Tenth Respondent
ELKA LOGISTIX PROPRIETARY LIMITED Eleventh Respondent
MANUCHAR SOUTH AFRICA PROPRIETARY LIMITED Twelfth Respondent
WALDICK INC Thirteenth Respondent
PACK N STACK PROPRIETARY LIMITED Fourteenth Respondent
SYNFINY ADVISORS DMCC Fifteenth Respondent
WANG ON FIBRES PROPRIETARY LIMITED Sixteenth Respondent
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WAKELY SMITH LATTUCA ADVISORY Seventeenth Respondent
PROPRIETARY LIMITED
WAKELY SMITH LATTUCA INC Eighteenth Respondent
ALOS INNOVATIVE WORKFORCE SOLUTION Nineteenth Respondent
PROPRIETARY LIMITED
D WHALLEY AND ASSOCIATES PROPRIETARY Twentieth Respondent
LIMITED
THE COMMISSIONER FOR THE SOUTH AFRICAN Twenty-First Respondent
REVENUE SERVICES
AYMAN OSSAMA MOHAMMED ABDELMEGUID Twenty-Second Respondent
PAUL TOOCH Twenty-Third Respondent
THE REMAINING AFFECTED PERSONS OF THE Twenty-Fourth Respondent
FIRST RESPONDENT
___________________________________________________________________
SUMMARY
___________________________________________________________________
Business rescue – application to set aside a vote rejecting a business rescue plan as inappropriate in
terms of section 153(1)(b)(i)(bb) read with section 153(7)(a) to (c) of the Companies Act, 2008 (“the
Act”). Principles to be applied in undertaking a single enquiry and value judgment. The approach is
informed by the reasons given for the rejection of the business rescue plan, weighed against any
benefits of liquidation with due regard to the purpose of business rescue as contemplated in section 7(k)
of the Act.
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Business rescue plan - The level of detail required in a business rescue plan will depend on the nature
and complexity of the proposed plan. A business rescue plan must contain all the facts necessary for
creditors to make an informed decision on how to exercise their vote. Ex facie the business rescue plan
it must appear that the rights and interests of all stakeholders have been considered and balanced.
Resumed meeting in terms of section 151 of the Act – the failure of an application in terms of
section 153(1)(b)(i)(bb) read with section 153(7)(a) to (c) does not lead, automatically, to the practitioner
being obliged to file a notice of termination of business rescue. At the resumed meeting , the creditors
may instruct the practitioner to prepare a revised business rescue plan. In the event that the creditors
do not do so, the practitioner will be obliged to a notice terminating business rescue.
In casu, the business rescue plan is predicated on the sale of the business of the company in business
rescue as a going concern. Ex facie the business rescue plan, the proposed sale of business favours
one creditor disproportionately in relation to other creditors. The facts necessary to establish whether
calculation of the purchase price is fair and reasonable and the facts to support the calculation of a
dividend not provided to the creditors. These facts were, similarly, not adduced in evidence. It cannot
be determined in the circumstances whether the business rescue plan achieves a fair balancing of
stakeholders’ rights and interests. T he vote against the business rescue plan was not inappropriate in
the circumstances.
The application to set aside the vote is dismissed.
JUDGMENT
PULLINGER AJ
INTRODUCTION
[1] The applicant ("Tamela") approaches this Court, by way urgency, seeking relief
in terms of section 153(1)(b)(i)(bb) read with section 153(7)(a) to (c) of the
Companies Act, 2008 ("the Act"). It seeks to set aside as "inappropriate", the
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vote of 19 September 2025 rejecting the proposed business rescue plan
presented to creditors of the first respondent ( "Wash") by its business rescue
practitioners ("the BRPs").
[2] Tamela has, since at least 2004, had a business relationship with Wash. In the
time from the inception of this relation ship to 27 March 2025, Tamela lent and
advanced some R175 million to Wash. This is undisputed.
[3] On 27 March 2025, Wash entered business rescue pursuant to a directors’
resolution taken in terms of section 129(1) of the Act.
[4] Between April and September 2025, Tamela lent and advanced a further
amount of R70 million in post commencement finance ("PCF") to Wash. This is
also not in dispute.
[5] The PCF enabled the BRPs to meet Wash’s monthly financial obligations of
some R8.1 million comprising, inter alia, salaries and wages for Wash's 107
employees of some R3 million and the costs to maintain, insure and secure
Wash's premises, plant and equipment in an amount of some R5 million.
[6] Tamela continues to make PCF available to Wash to enable the BRPs to meet
these monthly costs
[7] Tamela contends for a secured claim of pre and post -commencement finance
of some R238 million. Tamela’s contention of it being a secured creditor in
Wash, is vociferously challenged. This challenge occasions a dispute
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concerning Tamela’s locus standi and raises an issue of a material non-joinder.
These disputes were not foreshadowed in the relevant answering affidavits.
[8] The relief sought by Tamela is opposed by three creditors who voted against
the adoption of the proposed business rescue plan. They are the fifth
respondent ( "AECI"), the twenty -second and twenty -third respondent s being
members of Wash’s board of directors at the time the business rescue was
commenced ("the Management ") and the twelfth respondent ("Manuchar")
being a further creditor in Wash.
[9] The BRPs filed affidavits explaining their position but did not participate in these
proceedings.
[10] The background facts are uncontroversial. Wash and another entity described
as its sister company, KT Wash Liquids (Pty) Ltd ("Liquids") entered business
rescue on 27 March 2025. A business rescue plan for Liquids was approved.
That plan is contingent upon a business rescue plan being adopted in Wash.
[11] Wash and Liquids , historically, conducted business as a manufacturer of
household detergent producing its own branded washing powder and liquid
detergent products. They also manufactured and packaging of these products
for various multi-national corporations.
[12] For various reasons not directly material to this application, Wash and Liquids
became financially distressed . N otwithstanding Tamela’s substantial capital
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injections into these businesses, they unable to re-establish a sound financial
footing and led to these companies entering voluntary business rescue.
[13] On 5 September 2025 the BRPs published a proposed business rescue plan
("the Proposed Plan ") in Wash. A creditors’ meeting as contemplated in
section 151 of the Act was held on 19 September 2025 at 09h00 to consider
and vote on the Proposed Plan.
[14] The meeting of 19 September 2025 was attended by certain "Affected Persons"
(as defined in section 128(1)(a) of the Act). They participated in the meeting in
person and via an online platform. Several addresses were made by the
Affected Persons to the attendees.
[15] The Management and AECI sought a postponement of the meeting which the
BRPs declined to entertain. A motion for postponement was not put to the vote.
Rather, the Proposed Plan was put to the vote.
[16] Only 50.73% of the votes cast were in favour of the Proposed Plan. This
resulted in the threshold set in section 152(2) of the Act not being achieved and
the consequently, the rejection of the Proposed Plan.
[17] The section 151 meeting was postponed for Tamela to bring this application.
[18] In the end, the numerous affidavits filed of record , the parties ’ heads of
argument and supplementary heads of argument comprise some 900 pages of
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factually dense material and complex legal argument on, at least, two novel
issues.
[19] At the outset I express my gratitude to counsel for their comprehensive and
thorough heads of argument. These have assisted me greatly in the preparation
of this judgment.
[20] During the very able argument presented by counsel on behalf of the parties to
this application, two central issues crystalised. They are:
[20.1] was the rejection of the Proposed Plan "inappropriate" as
contemplated in section 153(1)(b)(i)(bb) of the Act? and
[20.2] does it follow from a finding that the rejection of the Proposed Plan
was not "inappropriate" necessitate in the BRPs filing a notice
terminating the business rescue in Wash as contemplated in section
153(5) of the Act?
[21] The parties agree that a finding that the rejection of the Proposed Plan was not
"inappropriate" leads to a dismissal of this application.
[21.1] As I understand Mr Daniels SC, who appeared with Mr Vett er for
Tamela, Tamela’s case is that should this application fail, the
creditors’ meeting that was adjourned for the purposes hereof will be
reconvened and , at that meeting , the BRPs will be constrained to
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advise the Affected Persons that the business rescue in Wash has
failed. This accords with the position expressed by the BRPs.
[21.2] The BRPs express the view that absent ongoing PCF, the liquidation
of Wash and Liquids is inevitable.
[21.3] The Management and AECI disagree with Tamela’s view on the
consequences of this application failing as being the end of the
business rescue in Wash.
[21.4] Mr Hoffman, who appeared with Mr Sila for the Management, argues
that, at the reconvened meeting, Wash’s creditors may may table a
motion requiring the BRPs to prepare and publish a revised plan. If no
such motion is tabled, the provisions of section 153(5) will become
applicable and oblige the BRP's to file a notice of termination of
business rescue proceedings. If, however, the motion passes, then
section 153(3) finds application. In that event, the BRPs must close
the meeting, prepare and publish a new or revised plan within 10 days
and the provisions of Part D of Chapter 6 of the Act will commence
start afresh.
[21.5] The position taken by Mr Amm SC, who appeared with Ms dos Santos
for AECI, similar to that of the Management. They argue that only in
the event of none of the remaining creditors exercising their rights in
terms of section 153(5), that the BRPs must proceed in terms of
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section 153(3) and file a notice of termination of the business rescue
proceedings in Wash.
[21.6] In this regard, AECI and the Management are aligned. They do not
see the failure of this application necessarily resulting in Wash’s
business rescue coming to an end.
[21.7] Mr Aldworth, who appeared for Manuchar, did not engage in this
debate or file supplementary heads of argument on the issue.
[21.8] Manuchar takes the point on urgency and attacks the Proposed Plan
as failing to provide facts to support the contentions advanced therein.
[21.9] Manuchar’s perspective of the matter is the liquidation of Wash holds
various advantages and may lead to better dividend to creditors.
[22] Prior to dealing with the central issues, there are preliminary issues raised by
AECI that require determination.
[22.1] AECI contends that Tamela does not enjoy locus standi in this matter.
This is intertwined with its contention Project Sparkle Security SPV
(RF) (Pty) Ltd ("Project Sparkle ") is a necessary party to these
proceedings.
[22.2] AECI contends that Project Sparkle is the true secured creditor in
Wash, therefore, so the argument goes, Tamela does not enjoy the
11
right in section 152(1)(b)(i)(bb) to seek an order setting aside the
creditors’ rejection of the Proposed Plan.
[22.3] AECI contends further , that this application ought not to have been
brought by way of urgency and raises issues of prejudice and
Tamela’s non-compliance with the applicable practice directives.
[22.4] As a result, AECI seeks an order striking the matter from the roll or
dismissing it if it finds success on any one or more of these preliminary
points.
[22.5] AECI also seeks an order striking out portions of Tamela’s affidavits
as being hearsay or advancing new facts in reply.
[22.6] To the extent that Tamela’s evidence is inadmissible, or that new facts
are inappropriately advanced in reply, I shall follow the approach in
Associated Institutions Pension Fund ,1 to the extent that it is not
permissible rebuttal evidence as discussed in Nkengana.2
[23] I commence with the issues raised by AECI in accordance with the principle in
Makhubela3 which holds that a court cannot proceed to hear a matter in the
1 Associated Institutions Pension Fund and Others v van Zyl and Others 2005 (2) SA 302 (SCA)
at [35].
2 Nkengana v Schnetler [2011] 1 All SA 272 (SCA) at 276 H – I.
3 Makhubela v Khampepe and Others [2024] ZAGPJHC 352 (10 April 2024) at [17].
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absence of a person or entity whose rights stand to be affected by the relief
sought in the proceedings and the principle in Chung-Fung4 which holds that
in cases presented to a court as an urgent application, the case for urgent relief
must be determined on its own merits, due regard being had to the
requirements of an absence of substantive redress in due course, the right in
section 34 of the Constitution, and the reasonableness of the abridgment of
time periods.
JOINDER, LOCUS STANDI AND URGENCY
[24] AECI’s contentions on joinder and locus standi depart from the premise that
Project Sparkle is "the direct security holder under the Tamela / KT Wash
funding transaction". AECI contends further that Project Sparkle appears to be
a creditor of Wash and an Affected Person in Wash’s business rescue.
[25] For this proposition AECI relies on the principle in Kilburn5 that the existence
of a valid underlying causa is a requisite for the registration of a notarial bond.
4 Chung-Fung (Pty) Ltd and Another v Mayfair Residents Association and Others [2023]
ZAGPJHC 1167 (13 October 2023) at [29] to [31].
5 Kilburn v Estate Kilburn 1931 AD 501 at 505 to 506 . This principle was applied in Land and
Agricultural Development Bank of South Africa v Impande Property Investments (Pty) Ltd
[2013] ZAGPJHC 398 (9 April 2013) with reference to Albert v Papenfus 1964 (2) SA 173 (E) at
721 E – H and Bay Loan Investment (Pty) Ltd v Bayview (Pty) Ltd 1972 (2) SA 313 (C) at 316 E
– G. These matters concerned whether a mortgage bond was given as security for an unlawful
underlying agreement. In Panamo Properties 103 (Pty) Ltd v Land and Agricultural
Development Bank of South Africa 2016 (1) SA 202 (SCA) the question before the court was
whether, in the context of a finding that an underlying agreement was void, whether the mortgage
bond registered pursuant thereto was enforceable. The court accepted the general principle in
bond registered pursuant thereto was enforceable. The court accepted the general principle in
Kilburn (at [28]) but found the mortgage bond to the valid and enforceable because of the specific
terms thereof (at [25] and [39] to [46]). Therefore, while the general principle holds true that a
13
So AECI reasons, Project Sparkle is a necessary party to this application and,
on the basis that Tamela is not a secured creditor, AECI asserts Tamela lacks
the necessary locus standi to pursue relief in terms of section 153(1)(b)(i)(bb)
read with section 153(7)(a) to (c) of the Act.
[26] As these points were not raised by AECI in its answering affidavit, and
consequently certain documents that may have been relevant to the issue have
not been placed before me. I am constrained to interrogate that which has been
filed of record to test whether the propositions advanced by AECI may hold true.
[27] The proposed business rescue plan records that
"15.4. Tamela’s debt (pre-commencement of business rescue plus the PCF) is secured
by way of a debt guarantee provided by [Project Sparkle] in respect of [KT
Wash]’s obligations to Tamela and who in turn has provided an indemnity to
[Project Sparkle] for any claims made by Tamela against [Project Sparkle].
15.5. ABSA, previously the first ranking senior creditor, has since been settled in full,
with the result that the obligations of [Project Sparkle] to Tamela (in respect of
both their pre business rescue commencement debt and PCF debt) are now first
ranking to Tamela.
15.6. On or around the end of May 2025, as part and parcel of the PCF (and future
PCF) and in order to provide the necessary security , the BRPs agreed to the
perfection of the GNB in order that PCF be released for future security payments
and to facilitate the ultimate rescue of the business. In agreeing to the perfection
of the GNB, the BRPS agreed with the with the bond holder [Project Sparkle] on
condition that [KT Wash] remain in possession of the relevant movable assets
mortgage bond will be unenforceable if the underlying causa is unlawful, the terms of the bond will
be decisive.
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and continue to utilise such assets to trade and fund the business rescue
proceedings to the extent possible. [Project Sparkle] approached the court on an
unopposed basis on 29 May 2025, with the application subsequently being made
an order of Court on 3 June 2025."
[28] It provides, further, at paragraph 26.4 that
"It is also specifically noted that with reference to the above, no discharge of the debt as
envisaged will in any way impact or negate "(i) the Guarantee provided by Harold Tooch
in favour to Tamela and/or the Security SPV [a reference to Project Sparkle], (ii) the
Guarantee provided by Trustees for the time being of the Harold Tooch Family Trust,
Prominent Sites Proprietary Limited and/or KT Wash Proprietary Limited in favour of
Tamela and/or the Security SPV; (iii) the Cession in Security of surplus proceeds provided
by Harold Tooch and the Harold Tooch Family Trust in favour of Tamela and/or the
Security SPV; and (iv) any other security provided by any third party in favour of Tamela
and/or the Security SPV (or any other Surety/Guarantees provided to any Creditor for that
matter)."
[29] At face value,
[29.1] Tamela holds security for the monies it has advanced to Wash . That
security is in the form of a guarantee from Project Sparkle. It appears
that, as a result of a mezzanine finance arrangement, ABSA advanced
funds to Wash through the Project Sparkle vehicle and the debt to
ABSA having been settled, Tamela as the only creditor in Project
Sparkle;
[29.2] Project Sparkle has taken security from Wash in the form of, inter alia,
a General Notarial Bond ( "the GNB") over Wash's movable assets,
which bond has been perfected;
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[29.3] the GNB provided by Wash to Project Sparkle secures a principal
amount of R300 million and an additional amount of R60 million over
Wash's immovable assets;
[29.4] The effect of the GNB is that
"The bondholder does not acquire any real right over the hypothecated
movables. There is nothing to prevent the owner dealing freely therewith and the
bondholder may not pursue them into the hands of a third party or prevent their
attachment in execution. U nder the perfection clause that is a common feature
of such bonds, the bondholder will be entitled to take possession of the movables
and thereby constitute a pledge over the movables. When that happens the
bondholder acquires a real right of security over the movables." 6
[29.5] The effect of the transaction between Tamela, Project Sparkle and
Wash, I can infer, without the benefit of the agreements, that Project
Sparkle guaranteed Wash’s obligations to Tamela on certain terms;
[29.6] Ordinarily, the guarantor takes security for the obligation it has
undertaken, realisable upon the happening of an event, which event
would, generally, be a default by the party whose performance of its
obligations to the third party is guaranteed;
6 FirstRand Bank Ltd v Land and Agricultural Development Bank of South Africa 2015 (1) SA
38 (SCA) at [4].
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[29.7] For these purposes, Project Sparkle took security from Wash in the
form of, inter alia, the GNB. As a result of the GNB being perfected,
the real rights in Wash’s assets now vest in Project Sparkle;
[29.8] Accordingly, the obligation secured by the GNB is Wash’s obligation
to Project Sparkle, being the quid pro quo for the guarantee issued by
it to Tamela. This is the lawful causa contemplated in Kilburn;
[29.9] The effect of the guarantee is, for purposes of a distribution to be
made in an insolvent estate, not considered to be “security” because
a creditor who holds a guarantee from a third party is not holding
"security" over any part of the insolvent estate;7
[29.10] In the insolvency context therefore, Tamela’s claim against Wash is
not "secured", as the guarantee is not security held over any of Wash’s
assets;
[29.11] Whether this holds true for purposes of business rescue need not be
decided here 8 because there is nothing to suggest that Tamela’s
7 Green & Co v F roming (1906) 23 SC 600 at 601; Maltz’s Trustee v National Bank of SA Ltd
1916 CPD 430 at 431 and Hunt, Leuchars & Hepb urn v J E Vorster & Co 1930 WLD 261 at
265/266.
8 In Levenstein, South African Business Rescue, the learned author makes the point at 9 -67 that the
meaning of a "secured creditor" for purposes of section 151 of the Act is unclear, at least in so far
as the meaning of thereof is relation to the phrase "a secured or unsecured creditor" means for
purposes of section 145(4) is concerned. He suggests, with reference to the view expressed in
Delport et al , Henochsberg on the Companies Act 71 of 2008 , that the ordinary meaning of
"unsecured creditor" should be followed. Insofar as the meaning of "secured creditor" is concerned,
I see no reason to depart from that approach. Accordingly, and I accept that that said in Bertelsman
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position as a creditor in Wash is affected by the transaction I described
above; the fundamental nature of a guarantee is such that it requires
a debtor - creditor relationship between the holder of the guarantee
and the person or entity whose performance i n terms of that
relationship is guaranteed. In Schmitthoff, The Law and Practice of
International Trade 9 the learned authors explain this proposition as
follows,
"In the common law the guarantee, or suretyship, is an arrangement involving
three parties: the principal debtor, the creditor, who has a claim against the
principal debtor, and a third party, the guarantor (the surety), who undertakes to.
be liable to the creditor if the principal debtor fails to, discharge his obligation to
him. The arrangement between the creditor and the guarantor is the
contract of guarantee. It is a secondary obligation, subsidiary to the
contract between the creditor and the principal debtor. … .
Since the contract of guarantee is accessory in nature, it follows that an
agreement may only be a guarantee if there is another, principal, obligation
to which it is subsidiary. In the words of Lord Selborne:
'There can be no suretyship unless there be a principal debtor, who of course
may be constituted in the course of the transaction by matters ex post facto
and need not be so at the time, but until there is a principal debtor there can
be no suretyship. Nor can a man guarantee anybody else's debt unless
there is a debt or some other person to be guaranteed' ." (emphasis
added; footnotes omitted)
et al, Mars The Law of Insolvency in South Africa, 10th ed at 20.3.1 where the learned authors opine
that a "secured creditor" for purposes of the Insolvency Act is one who enjoys security for is claim,
being a preferent right over the insolvent’s property by virtue of a special mortgage and the like and
that, as expressed at 20.3.1.2, it is only the bondholders over movable property who have secured
claims with reference to the definition of "special mortgage" as contemplated in section 2 of the
Insolvency Act.
9 Murray et al, Schmitthoff, The Law and Practice of International Trade 12th ed at 12-001
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[29.12] Then, but for the preference afforded in section 135(1) read with sub-
section 3(a) of the Act to providers of PCF, Tamela is at the very least,
a concurrent creditor in Wash.
[30] As I have described above , Tamela lent and advanced some R238 million to
Wash from 2024 to date. The advances made by Tamela to Wash are not in
dispute. Nonetheless, the fact of these advances become material when I
address AECI’s locus standi point below.
[31] Mr Daniels SC complained that neither AECI’s joinder point, nor its locus standi
point were squarely taken in AECI’s answering affidavit. He contends further,
that had they been raised, Tamela would have been able to properly address
these points. Mr Daniels SC placed reliance on the principle in Bato Star 10
which holds that the facts alleged by a litigant must make be clear as to what
underpins its case. This is fair enough, particularly, in the context of a review of
administrative action, as was the case in Bato Star , where the relevant
provisions of the Promotion of Administrative Justice Act, 2000 had not
specifically been identified. However, reliance on Bato Star may miss the point
10 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others 2004
(4) SA 490 (CC) at [26] and [27].
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AECI seeks to make. The real point , as I understand it, is that made in
Quartermark Investments11 which holds:
"It is trite that in motion proceedings affidavits fulfil the dual role of pleadings and evidence.
They serve to define not only the issues between the parties but also to place the essential
evidence before the court. They must therefore contain the factua l averments that are
sufficient to support the cause of action or defence sought to be made out. Furthermore,
an applicant must raise the issues as well as the evidence upon which it relies to discharge
the onus of proof resting on it, in the founding affidavit." (footnotes omitted)
[32] Arguably, the primary facts upon which Tamela relies for the conclusion that it
is a "secured creditor" and the documents that support th at conclusion should
have been adduced in evidence. I say "arguably" because it appears that
Tamela’s status was never been challenged before this litigation commenced.
I have not seen any suggestion of resistance in the affidavits filed of record, to
Tamela’s participation in the meeting of 5 September 2025. At the very least,
this signals a general acceptance that Tamela is a one of Wash’s creditors.
[33] The further point made by Mr Daniels SC is that non-joinder of a necessary
party and an objection to locus standi are usually taken by way of a special
plea12 which alerts the litigant against whom such point s are taken not only of
11 Quartermark Investments (Pty) Ltd v Mkhwanazi and Another 2014 (3) SA 96 (SCA) at [13].
12 In regard to locus standi, Trustees for the time being of the Legacy Body Corporate v BAE
Estates & Escapes (Pty) Ltd 2022 (1) SA 424 (SCA) holds that:
"[35] Significantly, this point was not even pleaded. In [8] – [10] above I have set out fairly
comprehensively the points in the trustees' answering affidavit upon which they rested their
defence to the application. This was not one of them. The point was raised for the first time
defence to the application. This was not one of them. The point was raised for the first time
in the application for leave to appeal. Ordinarily, a point of lack of locus standi should
have been pertinently raised in the answering affidavit to enable Bae Estates to meet
it, and for the High Court to pronounce on it.
20
the points, but also the factual basis upon which they are taken. AECI did not
do so. This led to Tamela not being afforded the opportunity to deal therewith
as aforesaid. It also occasioned the exercise undertaken above to dissect, from
the available facts, the relationship between Wash, Tamela and Project
Sparkle.
[34] Mr Amm SC’s retort, with reference to the principl es in Eagles Landing13 and
Rosebank Mall ,14 was that an applicant, such as Tamela , must make the
necessary allegations, in its founding affidavit, to found its locus standi and,
ensure that relation to parties who have a direct and substantial interest in the
outcome of litigation are properly joined. He argued that where there is a party
whose rights may be detrimentally affected by any decision made by the court,
its joinder is so essential that the court may mero motu make an order joining
that party – even on appeal – and give appropriate further procedural directions.
[36] It is so that the mere fact that a point of law is raised for the first time on appeal is not in
itself a sufficient reason for refusing to consider it. If the point is covered by the pleadings,
and if its consideration on appeal involves no unfairness to the other party against whom
it is directed, a court may in the ex ercise of its discretion consider the point. It would be
unfair to the other party if the point of law and all its ramifications were not canvassed and
investigated at trial. In this case, the point was neither covered in the affidavits, nor was it
canvassed and investigated in the High Court. It is, therefore, patently unfair to Bae Estates
to have to be confronted with the point for the first time on appeal. For this reason a lone,
the locus standi point must be dismissed. But, in any event, as I show below, there is no
merit to the point." (emphasis added, footnotes omitted)
In regard to joinder, Skyline Hotel v Nickloes 1973 (4) SA 170 (W) holds at 171 H, that a point of
joinder (non-joinder or misjoinder) is usually taken by way of a special plea. Anderson v Gor dik
Organisation 1960 (4) SA 244 (D) holds, at 247 D that, "I consider it to be clear beyond question
that the usual procedure by which to raise a question of joinder, whether it be misjoinder or non -
joinder, is by way of plea in abatement."
13 Eagles Landing Body Corporate v Molewa N.O and Others 2003 (1) SA 412 (T) at [36]
14 Rosebank Mall (Pty) Ltd v Cradock Heights (Pty) Ltd 2004 (2) SA 353 (W) at [11]
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[35] I consider these principles and their application to the facts of this matter below.
Joinder
[36] The proposition advanced by Mr Amm SC is undoubtedly correct in so far as
the general principles of joinder are concerned. The Constitutional Court made
this plain in SARDA15 which dealt with the right of intervention as a party of
necessity – the opposite side of the proverbial coin of joinder. Makhubela
explains the underlying rationale for the joinder of parties who are the bearers
of rights that may be affected by the outcome of the litigation.16
[37] SARDA17 holds that:
"What constitutes a direct and substantial interest is the legal interest in the subject-matter
of the case which could be prejudicially affected by the order of the court. This means that
the applicant [for intervention] must show that it has a right adversely affected or likely to
be affected by the order sought."
[38] The application of the SARDA principle requires an enquiry as to whether the
third party , that is not party to the pending lis, enjoys rights that may be
detrimentally affected.
15 SA Riding for the Disabled Association v Regional Land Claims Commissioner and Others
2017 (5) SA 1 (CC)
16 ibid at [9] to [16]
17 ibid at [9]
22
[39] In Naude,18 the Supreme court of Appeal held that mere notice to creditors of
legal proceedings that materially affect the business rescue plan they voted on
and approved is insufficient. Here the court applied the "direct and substantial
interest" test with regard to the rights of creditors in relation to the business
rescue plan they approved. It concluded that, on the facts of that case, the
creditors concerned were directly affected by the proposed changes to the
business rescue plan because their rights could be detrimentally affected by
the order sought.
[40] The Naude decision was followed in the Supreme Court of Appeal’s later
decision in Kransfontein19 which holds that, in an application to set aside an
approved business rescue plan, the joinder of those creditors who voted in
favour thereof was necessary. It too held that the relief sought, the effect of
which was to reduce the concurrent creditors’ dividend, affect ed their rights
under the plan approved by them.
[41] There is, then, very little room for debate on the issue of joinder where there
are third party rights that are directly implicated and affected by the relief sought
in proceedings 20 or that an order cannot be given effect without the participation
18 ABSA Bank Ltd v Naude N.O and Others 2016 (6) SA 540 (SCA) at [10] and [11]
19 Kransfontein Bele ggings (Pty) Ltd v Corlink Twenty Five ( Pty) Ltd [2017] ZASCA 131 (29
September 2017) at [15]
20 SARDA at [10]
23
of that party. In these instances, joinder of that party must be ordered . And,
joinder of that party is a requisite to the matter proceeding.21
[42] In each case where the question of joinder arises, care must be taken to
ascertain the right concerned, whether the party said to be affected is the holder
of that right and whether that right is implicated and could be detrimentally
affected by the relief sought.22
[43] In ascertaining whether, in a business rescue context, a creditor has rights that
could detrimentally be affected by the relief sought in any litigation, the
departure point is section 145(1) of the Act which requires that "notice of court
proceedings" be given to creditors.
[44] The Supreme Court of Appeal ’s decision in Timasani23 considers the proper
interpretation of section 145(1).
[45] The factual context of Timasani is legal proceedings for the recovery of a
deposit held on behalf of the company in business rescue. These proceedings
were brought against that company by the party that paid the deposit .24 The
Supreme Court of Appeal drew the distinction between instances where a
21 MV Smart: Minmetals Logistics v Owners of MV Smart 2025 (1) SA 392 (SCA) at [14]
22 United Watch & Diamond Co and Others v Disa Hotels Ltd and Another 1972 (4) SA 409 (C) at
416 H; SARDA at [9]; Sundays River Citrus Co (Pty) Ltd and Others v Lonetree Citrus CC and
Others 2025 (1) SA 529 (ECGq) at [40]
23 Timasani (Pty) Ltd (in business rescue) a nd Another v Afrimat Iron Ore (Pty) Ltd [2021] 3 All
SA 843 (SCA)
24 ibid at [12]
24
creditor has a direct and substantial interest in the proceedings which would
require joinder, and where they did not have such ab interest and their joinder
not required, as follows
"[17] Two points are required to be made. First, s 145(1) sets out in some detail the
rights and obligations of creditors when participating in business rescue
proceedings as a whole, in addition to the rights conferred on creditors as
‘affected persons’ by specific provisions of Chapter 6 of the Act. Subsection 1(a)
is a general notification requirement to creditors of court proceedings,
decisions and meetings concerning the business rescue. It has nothing to
do with the joinder of creditors in legal proceedings involving a company
in business rescue . Having regard to the language, context and purpose of s
145, this is underscored by ss 145(2) and 145(3). Subsection (2) provides that in
addition to the rights in subsection (1), each creditor has the right to vote to
amend, approve or reject a proposed business rescue plan and if that plan is
rejected, to propose an alternative plan or make an offer for the interests of other
creditors. In terms of subsection (3), creditors are entitled to form a committee to
be consulted by a business rescue practitioner in the development of a business
plan.
[18] Second, and consistent with the text, context and purpose of s 145, subsection
(1)(b) confers on creditors a statutory right to participate in any legal
proceedings that arise during the business rescue proceedings of a
company. In this respect s 145(1) (b) stands on an equal footing with s 131(3)
of the Act, in terms of which each affected person has a right to participate in an
application to place a company in business rescue. In both cases the leave of
the court to intervene in the proceedings is not required, but the court may need
to regulate the procedure to be followed if the affected person or creditor wishes
to file affidavits.
to file affidavits.
[19] Inasmuch as a company in business rescue must be cited in legal proceedings
against it, the duty to give notice to creditors in terms of s 145(1) (a) rests on the
business rescue practitioner. Being a general notification requirement, the
purpose of s 145(1)(a) is to inform creditors of court proceedings brought
during business rescue: it does not require the joinder of every creditor in
such proceedings. This is hardly surprising as the business rescue practitioner
25
has full management control of the company during business rescue
proceedings; is obliged under the Act to keep creditors abreast of developments
in the business rescue, and knows who the creditors are and which of them may
wish to participate in the relev ant legal proceedings. Two cases were cited in
support of the submission that s 145(1) (a) required the joinder of all
creditors in any legal proceedings involving the company in business
rescue. However, both these cases involved the fate of the business rescue
plan and contentions that directly affected the financial interests of
creditors. They were not authority for the submission advanced." (emphasis
added; footnotes omitted)
[46] The cases to which the court in Timasani had regard in reaching its conclusion
on the point were Naude and Kransfontein. It found that neither Naude nor
Kransfontein were authority for the proposition that all the creditors of a
company in business rescue were necessary parties to all litigation involving
the company in business rescue.
[47] I now proceed to examine Project Sparkle’s right that AECI contends will be
detrimentally affected by the order Tamela seeks. In its heads of argument,
couches its contention as follows,
"72. Project Sparkle is the direct security holder under the Tamela / KT Wash funding
and security transaction. It is also, by all accounts, a creditor of KT Wash and an
affected person in KT Wash's business rescue.
73. The aforesaid is legally and factually unavoidable because an essential requirement
for the registration of a notarial bond is that there must be a legal valid (underlying)
causa or cause of debt to which the hypothecation (notarial bond) is accessory. '
Otherwise, where no cause of debt exists or is owed to the (purported) bond holder,
there cannot be a validly registered bond.
74. Accordingly, because Project Sparkle is the direct real security holder - and a true
creditor of KT Wash (as opposed to Tamela - because the notarial bond claimed by
26
Tamela could only have been registered over KT Wash's movables in favour of
Project Sparkle' in order to secure a debt owed by KT Wash to Project Sparkle). "
[48] I have quoted above extracts from the Proposed Plan.
[48.1] It appears to me, without the benefit of the issue of Project Sparkle’s
rights and interests being traversed in the affidavits filed of record, that
its position is unaffected by this application.
[48.2] Paragraph 26.4 of the plan specifically preserves all the rights in and
to the security it holds, if the Proposed Plan is approved.
[48.3] Said differently, Project Sparkle held security before the vote on the
Proposed Plan and will continue to do so irrespective of the outcome
of this matter.
[49] As a result, I find that Project Sparkle does not have a direct and substantial
interest in the outcome of this application, as contemplated in the authorities ,
that make it a necessary party.
[50] Notwithstanding the conclusion to which I have come , a party may waive its
right to joinder.
27
[51] The locus classicus decision of Amalgamated Engineering 25 considers the
position of a party in the position of Project Spark le. It postulates the test as
being whether notice of legal proceedings, without more, establishes waiver
and holds that waiver cannot be established in circumstances where a party
that is not cited as a party to the proceedings simply takes no action.
[52] The more recent decision in Watson26 holds that even in circumstances where
there is a waiver of the right to joinder, it is desirable that the party be heard on
whether it would submit to a judgment.
[53] In this matter, there is correspondence filed of record by Project Sparkle signed
by one Candice Rachel Risi, its director of the company and addressed to
Tamela and the BRPs. Under a heading identifying this application, it records:
"I ref er to the above mentioned Application and can confirm that the Security PSV,
PROJECT SPARKLE SECURITY SPV (RF) PROPRIETARY LIMITED – as referred to in
paragraphs 45 and 46 of the founding affidavit of the Application – has been furnished with
a copy of the Application, does not wish to participate in the Application and instead hereby
gives notice that it will abide the decision of the Court."
[54] I am satisfied that Project Sparkle is aware of this application and that, by giving
notice of its intention to abide, the test in Amalgamated Engineering as
restated and expressed in Watson is met and it has waived its right to joinder.
25 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 659 and 662 to
663
26 Watson N.O v Ngonyama and Another 2021 (5) SA 559 (SCA) at [51] and [52]
28
Notice to abide a decision, as I see it, is a considered and informed election not
to participate in the proceedings.27
[55] Consequently, the position is the opposite of that in Selborne Furniture28 and
Pretorius29 where, in each instance, the court’s concern was about a party that
may have the requisite interest in the proceedings and should be afforded an
opportunity to be heard. Here, Project Sparkle has indicated that it does not
require the opportunity to be heard.
Locus standi
[56] Locus standi concerns legal standing to seek relief before a court. It asks
generally, the question of whether an applicant or plaintiff, as the case may be,
is the bearer of the right it seeks to enforce. In Firm-O-Seal,30 the Supreme
Court of Appeal expressed itself on the issue as follows:
"Locus standi in iudicio is an access mechanism controlled by the court itself. Generally,
the requirements for locus standi are these: the plaintiff must have an adequate interest in
the subject matter of the litigation, usually described as a direct interest in the relief sought;
the interest must not be too remote; the interest must be actual, not abstract or academic;
and, it must be a current interest and not a hypothetical one. Standing is thus not just a
procedural question, it is also a question of substance, concerning as it does the sufficiency
27 Laws v Rutherford 1924 AD 621 at 623; Mohamed and Another v President of the Republic of
South Africa and Others (Society for the Abolition of the Death Penalty in South Africa and
Another Intervening) 2001 (3) SA 893 (CC) at [62]
28 Selborne Furniture Store (Pty) Ltd v Steyn N.O 1970 (3) SA 774 (A) at 780 G
29 Pretorius v Slabbert 2000 (4) SA 935 (A) at 939 C - F
30 Firm-O-Seal CC v Wynand Prinsloo & van Eeden Incorporated and Another [2023] JOL 59780
(SCA) at [6]
29
of a litigant's interest in the proceedings. The sufficiency of the interest depends on the
particular facts in any given situation. The real enquiry being whether the events constitute
a wrong as against the litigant."
[57] The starting point is an examination of the relief Tamela claims . For these
purposes, it is convenient to quote relief claimed by Tamela from the notice of
motion. Tamela seeks relief as follows:
"1 Dispensing with the rules relating to service and time periods and disposing of this
application as one of urgency in accordance with the provisions of Rule 6(12).
2 The applicant is granted leave to serve this application on all the respondents and
affected persons by way of e-mail.
3 To the extent necessary, the applicant is granted leave to institute these
proceedings pursuant to the provisions of section 133(1)(b) of the Companies
Act 71 of 2008 (as amended) (the Companies Act).
4 The result of the vote by the holders of voting interests rejecting the business rescue
plan of the first respondent as published on 5 September 2025 (the Plan), at the
meeting convened in terms of section 151 of the Companies Act held on 19
September 2025 (the Meeting) is set aside on the grounds that it was inappropriate.
5 The costs of this application shall be paid by any party opposing this application, jointly
and severally with every other party that opposes, including the costs of two counsel,
to be taxed on scale C."
[58] The relief in paragraphs 1 to 3 and 5 is procedural and not directly implicated
by the challenge to Tamela’s locus standi to apply for the substantive relief
claimed in paragraph 4.
[59] In paragraph 4 of its notice of motion , Tamela seeks relief in terms of section
153(1)(b)(i)(bb) of the Act. The section provides for any Affected Person,
30
present at the meeting convened for purposes of a vote on the proposed
business rescue plan, in circumstances where that proposed business rescue
plan has been rejected, an Affected Person may apply to court for an order
setting it aside as inappropriate in circumstances where the business rescue
practitioner does not exercise any of the powers in section 153(1)(a) of the Act.
[60] Properly understood, section 153(1)(b)(i)(bb) affords a statutory right to an
Affected Person who was present at the meeting where a proposed business
rescue plan was rejected, pursuant to a vote, to approach the court to have the
vote set aside.
[61] Section 128(1)(a) defines an Affected Perion as being, inter alia, a "creditor".
[62] The Act does define the term "creditor”, nor does it refer to a "secured creditor".
The reference to an "independent creditor " in section 128(1)(g) affords little
elucidation.
[63] Tamela, given the absence of any dispute that it lent and advanced monies to
Wash prior to business rescue commencing and thereafter, as PCF, is clearly
a creditor of Wash irrespective of how it has described itself. It falls within the
ambit of “Affected Person” as a result.
[64] Notwithstanding, it is Tamela’s description of itself as a "secured creditor" in
Wash that is the nub of AECI’s contention as to the reason Tamela lacks locus
standi.
31
[65] Much like AECI’s point on joinder, this is not a point squarely raised in the
answering affidavit. It is also not raised in its initial heads of argument. It was
raised in oral argument before me.
[66] In AECI’s supplementary heads of argument, its contention on this point is
couched as follows:
"9. Tamela's self-claimed status as a secured creditor of KT Wash serves as the
underlying foundation of the rejected plan, and so too the basis upon which
Tamela pursues this application. Tamela asserts that it is secured for both KT
Wash's pre-business rescue monies lent and advanced debts, and in respect of
post commencement finance.
10. Additionally, Tamela's self-claimed status as a secured creditor of KT Wash has
caused the business rescue practitioners to defer to Tamela. This deference has
manifested itself (i) in the business rescue practitioners' rejection of competing
business rescue offers for KT Wash's business and assets, and (ii) in their
formulation, proposing and pursuit of the rejected plan.
11 …
12. However, Tamela is not a creditor, let alone a secured creditor, of KT Wash.
Tamela's own founding affidavit reads:
"45. As security for the applicant's claims against the first respondent, the
first respondent caused a general notarial bond to be registered in
favour of Project Sparkle Security SPV (RF) Proprietary Limited (the
Security SPV). The Security SPV was utilis ed to implement a sharing
of security between the applicant and Absa Bank Limited (Absa)."
13. …
14. …
15. …
32
16. Because (i) Project Sparkle is the holder of the general notarial bond, Tamela
therefore cannot factually nor legally be a creditor, let alone a secured creditor,
of KT Wash; be it within the context of the pre-business rescue debts, or the post
commencement finance debts because both heads of debt are secured under
the same perfected general notarial bond.
17. The ineluctable consequences of the aforesaid, for purposes of this application
include: (i) Tamela is not an affected person for purposes of KT Wash's business
rescue; (ii) Tamela has no say, let alone any vote in KT. Wash's business rescue,
including in respect of the adoption of a business rescue plan; (iii) Tamela has
no locus standi in this application; and (vi) Tamela must fail in this application.
18. Even if we are wrong in the aforesaid regards and Tamela is actually the holder
of the general notarial bond and as such a secured creditor of KT Wash, we
nevertheless maintain - for the reasons already traversed in our primary heads
of argument - that giv en the timing and insolvent circumstances in which the
aforesaid security was furnished (i.e. disposed of by KT Wash), the general
notarial bond is liable to being impeached and voided within the context of
sections 29 and 30 of the Insolvency Act, read with section 339 of the Companies
Act, 2008 and/or acted upon by the business rescue practitioner as a "voidable
transaction" of the type contemplated by section 141(1)(c)(ii) ." (footnotes
omitted)
[67] I have difficulty with AECI’s reasoning. The true question is whether Tamela is
a creditor in Wash; this informs whether it is an Affected Person . I f it is an
Affected Person , it necessarily enjoys the statutory right in
section 153(1)(b)(i)(bb) of the Act.
[68] The Supreme Court of Appeal’s decision in Zungu-Elgin31 would appear to
support the approach I have taken in relation to Tamela’s locus standi being
determined by asking whether it is Wash’s creditor. Zungu-Elgin concerned a
determined by asking whether it is Wash’s creditor. Zungu-Elgin concerned a
surety’s right of recourse against the company in business rescue arose after
business rescue commenced. The proposition advanced, with reference to
section 154(2) of the Act, was that the debt to the surety became due before
31 Zungu-Elgin Engineering (Pty) Ltd v Jeany Industrial Holdings (Pty) Ltd & Others [2020]
ZASCA 160 (3 December 2020) at [10] to [14]
33
business rescue commenced, was not included in the approved and
implemented business rescue plan and should consequently not be
enforceable. This proposition was rejected. The court held:
"The question is whether s 154(2) of the Act expressly or by necessary implication varied
the common law principle that a debt based on the surety’s right of recourse arises upon
payment to the creditor. It did nothing of the sort. On the contrary, in terms of s 154(2) the
question whether any debt was owed by the company at the specified point in time, is to
be determined in terms of existing law, including the common law."
[69] As I understand the point made in Zungu-Elgin, the meaning of the word
"creditor" is answered by asking the question whether there is a debt owed by
the company in business rescue to that person or entity claiming to be a
"creditor" of that company. If yes, that person or entity is necessarily a "creditor".
[70] I have already concluded that the GNB, upon its perfection, has afforded Project
Sparkle real rights of the immovable assets that were hypothecated by Wash. I
have also concluded that Tamela is, at the very least, preferent or concurrent
creditor in Wash , regard being had to a proper understanding of the legal
relationship created by the guarantee.
[71] Any controversy arising from Wescoal32 concerning the meaning of the term
"creditor" was put to rest on appeal in Mashwayi Projects . 33 Wescoal
32 Wescoal Mining (Pty) Ltd v Mkhombo N.O and Others 2024 (2) SA 563 (GJ) at [17] and the
conclusion at [20] that a "creditor" for purposes of section 152 of the Act, means "creditors" of the
entity in business rescue at the time business rescue commences.
33 Mashwayi Projects (Pty) Ltd and Others v Wescoal (Pty) Ltd and Others [2025] ZASCA 5 (29
January 2025)
34
concerned the question whether , for purposes of voting rights in a business
rescue, post commencement creditors are excluded.
[72] Mashwayi Projects, with reference to grammatical, contextual and purposive
approaches to interpretation espoused in Cool Ideas ,34 and the principle in
Thomas35 holds that, unless the legislature specifically defined a word thereby
assigning a special meaning to it , which is not the ordinary meaning, the
ordinary meaning is generally the meaning to be ascribed thereto . The
Supreme Court of Appeal concluded that:
"[t]he absence of a specific definition of ‘creditor’ is an indication that the Legislature did
not contemplate a specific meaning other than the ordinary grammatical meaning of the
word; that is a person or entity to whom an unpaid debt is due. Unless the Act has classified
creditors and given them different or unequal rights, there is no basis to import, via
interpretation, any such different or unequal rights. Any interpretation which draws
distinctions between different categories of creditors, without express legislative
sanction, would fall foul of the equality provisions of the Constitution and the
obligation to interpret statutes through the prism of the Bill of Rights and the
Constitution as required by s 7(a) of the Act. No absurdity would result i f the word
were afforded its ordinary meaning." (emphasis added)
34 Cool Ideas 1186 CC v Hubbard and Another 2014 (4) SA 474 (CC) at [28]
35 Minister of Defence and Military Veterans v Thomas 2016 (1) SA 103 (CC) at [20]
35
[73] A "secured" creditor and a "concurrent" creditor is, necessarily, a sub-set of the
broader genus of "creditor". For these purposes, therefore, it is irrelevant how
Tamela describes itself.
[74] Finally, the question of whether the GNB may be impeached does not arise for.
This may become an issue if Wash is placed into liquidation, but it does not
change the fact that Tamela is a creditor of Wash and consequently an Affected
Person for the purposes of Wash’s business rescue and those provisions of the
Act under consideration.
Urgency
[75] There is, in this Division, a dedicated Insolvency Court that has been created
to provide for an expeditious hearing of matters concerning insolvency and
business rescue.36 In the ordinary course, a hearing date can be expected within
four weeks of a matter becoming ripe for hearing.37 The Insolvency Court sits,
only during the normal court terms, save for the last week of every term.
[76] There are, however, matters where the delay occasioned by the ordinary time
periods prescribed in the Rules of Court followed by an interregnum between
the matter becoming ripe and a hearing date being allocated is simply too long
to afford an applicant a meaningful remedy. This is the point made in Chung
36 Dedicated Insolvency Court Directive, 10 March 2025 at paragraph 3
37 ibid at paragraph 6 read with paragraph 8
36
Fung.38 When a litigant approaches the urgent court is required to present a
fully reasoned explanation for the prejudice a delay in a hearing will occasion
to establish the "absence of substantial redress " requirement in Rule 6(12) of
the Uniform Rules of Court.
[77] The Insolvency Court Practice Directive sets out further, a guideline as to the
threshold an applicant must establish when seeking urgent relief before the
Insolvency Court.39
[78] In so far as the abridgement of time periods is concerned, Luna Meubels40
holds that the abridgement of time periods for the filing of papers must be
commensurate with the exigencies of case demands.
[79] For the purposes of urgent applications before the Insolvency Court , legal
practitioners are required to have due consideration to the consequences that
may befall an applicant should it not be afforded a hearing outside of the normal
expedited process.
[80] As part of this consideration, regard must be had to the length of the papers
that will serve before the Court. This an important consideration because urgent
38 ibid at [24]
39 ibid at paragraph 10
40 Luna Meubel Vervaardigers (Edms) Bpk v Makin & Another (t/a Makin's Furniture
Manufacturers) 1977 (4) SA 135 (W) at 137 F
37
applications in the Insolvency Court are heard by a judge to whom numerous
unopposed and ordinary opposed applications are allocated.41
[81] The materiality of this consideration should not be glossed over ; there will be
an inevitable time constraint when it comes to oral argument and , when the
issues are complex or novel and by their nature necessitate a lengthy hearing,
the question of appropriateness in setting the matter down for hearing in the
Insolvency Court arises.
[82] In certain instances, it will be more appropriate that directions from the Deputy
Judge President be sought before the matter is enrolled. Instances where
directions should be sought include those where the papers are voluminous,
numerous parties are involved or the issues, factual and/or legal, are complex.42
[83] Regard should also be had to the time it would reasonably take for a judgment
to be written. Common sense dictates that the more voluminous the papers, the
more parties involved and the more issues requiring determination together with
the complexity thereof , the greater the time required for these to be properly
considered and a judgment produced.
[84] So, when delay in obtaining relief is such that an incurable prejudice will result,
a litigant has the right to approach an urgent court and to abridge of time periods
41 ibid at paragraph 3
42 ibid at paragraph 14.2
38
for the filing of affidavits. In doing so, it must be cautious to limit the time
afforded for the filing of papers as little as the facts will allow. And, in setting the
matter down for hearing, it must be cognisant of the considerations referred to
above.
[85] Chung-Fung refers to the earlier decision s of Koen43 and Matshazi,44 that
recognise, in business rescue proceedings, a hearing is ordinarily required on
an urgent basis. In Koen,45 the court observed that
"It is axiomatic that business rescue proceedings, by their very nature, must be conducted
with the maximum possible expedition. In most cases a failure to expeditiously implement
rescue measures when a company is in financial distress will lessen or entirely negate the
prospect of effective rescue. Legislative recognition of this axiom is reflected in the tight
time lines given in terms of the Act for the implementation of business rescue procedures
if an order placing a company under supervision for that purpose is granted. There is also
the consideration that the mere institution of business rescue proceedings — however
dubious might be their prospects of success in a given case — materially affects the rights
of third parties to enforce their rights against the subject company."
[86] In Copper Sunset46 the High Court remarked that the respondents had properly
conceded the urgency of the matter. Such a concession would have been
appropriate in this matter; Tamela is advancing substantial sums of money each
43 Koen v Wedgewood Village Golf and Country Estate (Pty) Ltd 2012 (2) SA 378 (WCC)
44 Matshazi and Others v Mezipoli Melrose Arch (Pty) Ltd and Another [2020] ZAGHJHC 135 (3
June 2020)
45 ibid at [10] . This approach has been adopted in numerous matters including AG Petzektakis
International Holdings Ltd v Petzetakis Africa (Pty) Ltd and others (Marley Pipe Systems and
Another intervening) 2012 (5) SA 515 (GSJ) at [30] and Booysen v Jonkheer Boerwynmaakery
Another intervening) 2012 (5) SA 515 (GSJ) at [30] and Booysen v Jonkheer Boerwynmaakery
(Pty) Ltd and Another 2017 (4) SA 51 (WCC) at [47] albeit in the context of the proper interpretation
of the business rescue provisions in the Act.
46 Copper Sunset Trading 220 (Pty) Ltd v Spar Group Ltd and Another 2014 (6) SA 214 (LP) at
[19].
39
month to Wash. These monies are essential to enable the BRPs to meet
Wash's financial obligations to employees , s ecurity, insurance , and the
maintenance of Wash's plant and equipment. The decision on whether the vote
on the proposed business rescue plan was appropriate or not, impacts Tamela
which has undertaken to meet these financial requirements for so long as Wash
is in business rescue. A hearing on an urgent basis is warranted; this matter is
time sensitive and of great importance to Tamela to Wash’s employees and, I
would expect, to AECI.
[87] Insofar as the Management is concerned, the decision herein, and particularly
a decision on the consequences of it being found that the vote on the proposed
business rescue plan is not to be set aside, impacts heavily on what they intend
to propose to the BRPs at a reconvened meeting. They very properly conceded
that this matter requires a hearing on an urgent basis.
[88] AECI is the most vocal party to these proceedings in asserting prejudice by the
abridgement of the time periods. It asserts that it could not properly answer the
founding affidavit in the time available to it. It is, however, silent on what it would
have traversed if more time had been afforded to it. This does not ground a
meaningful case for prejudice. 47 As will become more apparent below, its
47 Chung-Fung at [28]
40
fundamental attack on this application is that Tamela seeks to place itself in an
unduly advantageous position when compared with Wash’s other creditors.
[89] AECI complains further that the prescripts of the Practice Directive have not
been satisfied, fully or at all. This may be so, but it overlooks a fundamental
principle. The decision to enrol a matter as one of urgency is one of judicial
discretion. The Appellate Division decision in Safcor48 holds that:
"… it is for the Court to decide whether the matter is really one of urgency and whether the
circumstances warrant a departure from the normal procedures. To hold otherwise would,
in my view, make the Court the captive of the Rules. I prefer the view that t he Rules exist
for the Court, rather than the Court for the Rules."
[90] I have previously expressed in Sasol,49 reliance upon less than perfect
procedural steps in the absence of real prejudice is to be eschewed. The proper
function of a court is to try disputes between litigants who have real grievances
and prevent unjustifiable delay in so doing. To the extent that further support
for this proposition is required, the decision in DF Scott50 holds that
“Rules of Court are designed to ensure a fair hearing and should be interpreted in such a
way as to advance, and not reduce, the scope of the entrenched fair trial right (s 34 of the
Constitution)”.
48 Safcor Forwarding (Johannesburg) (Pty) Ltd v National Transport Commission 1982 (3)
SA 654 (A) at 675 H
49 Sasol South Africa Ltd t/a Sasol Chemicals v Penkin 2024 (1) SA 272 (GJ) at [56] and [57]
50 DF Scott (EP) (Pty) Ltd v Golden Valley Supermarket 2002 (6) SA 297 (SCA) at [9]
41
[91] As is pointed out by Tamela (and the BRPs), it remains undisputed that Wash
requires "ongoing and significant post-commencement finance", and there are
no other parties willing and able to provide such finance. They are then, correct
in stating it would be unreasonable and unjust for Tamela to continue funding
Wash for an extended period in circumstances where uncertainty surrounding
the Proposed Plan exits.
[92] While the Management did deposit R4 million into the trust account of its
attorneys to cover the costs of employees’ salaries and wages, t his is only
sufficient to meet Wash's obligations to its employees for a pproximately one
month. This has no real effect on the on-going prejudice to Tamela if it were to
fail in this application.
[93] Manuchar commendably, filed a short answering affidavit dealing with the
pertinent issue of the "appropriateness" of the vote on the proposed business
rescue plan.
[94] Manuchar takes the point, in its heads of argument, that the abridgment of time
periods by Tamela is not supported by the facts, regard being had to the time
Wash has already been in business rescue. To my mind, this makes the
necessity of an urgent hearing even more acute.51
51 Consider in this context DH Brothers Industries (Pty) Ltd v Gribnitz N.O and Others 2014 (1) SA
103 (KZP) at [27] that insofar as business rescue proceedings are concerned, the business rescue
42
[95] I do not agree with the contention advanced by AECI and Manuchar that this
matter should be delayed; had Tamela brought this application in the ordinary
course and all affidavits filed in accordance with the Uniform Rules of Court by
the middle of November 2025, with heads of argument having all being
delivered five weeks later,52 there was no prospect of a hearing during 2025
much less, one before late February or March 2026.
[96] During this time, Tamela would have an ongoing exposure to Wash that impacts
upon its position both in business rescue and, should a liquidation ensue, in
such proceedings.
[97] Ultimately, a court deciding whether to hear a matter on an urgent basis asks
what prejudice will be suffered by an applicant between the date on which it
approaches the urgent court and the date of a hearing in due course. If, as a
general proposition, there is prejudice that cannot be undone in due course, an
approach to the urgent court is warranted.
[98] In circumstances where Tamela is, if not the only party exposed to the cost of
keeping Wash out of liquidation in the interim, it is the party carrying the greatest
of these costs and therefore it is entitled to approach the court by way of
provides limited window of opportunity for a plan to be published. This is to prevent creditors’ rights
being delayed indefinitely.
52 Revised Consolidated Practice Directive of 12 June 2024, paragraph 25.1.1.
43
urgency. Given the interests involved, the necessary exceptional
circumstances contemplated in the Practice Directive are present.
[99] I conclude that it is appropriate for this matter to be heard as an urgent
application.
THE PROPOSED PLAN
[100] In the discussion that follows, I have regard to the content of the Proposed Plan
and the narrative given by the BRPs on their approach to the Proposed Plan.
Tamela’s founding affidavit addresses the proposed Plan and motivates the
reasons it should have been adopted. As this is not a review of the B RPs’
conduct in preparing the Proposed Plan, I have no regard to those allegations
which suggest that Tamela unduly influenced the Proposed Plan. To the extent
that any of Wash’s creditors had, or may continue, to harbour concerns about
the BRPs, they have remedies available to them.
[101] The BRPs, in their narrative, set out the structure of the proposal with reference
to paragraph 22 of the Proposed Plan.
[102] The BRPs explain that the proposed business rescue plan involves the disposal
of the businesses of Wash and Liquids to an entity related to Tamela and known
as the Tamela SPV Admin (Pty) Ltd ("the Newco") for an approximate
purchase price of R123.1 million. Wash’s assets will be disposed of to Newco
as part of the transaction.
44
[103] The purchase price is split into a cash and credit component. The cash
component is split between Wash and Liquids to allow for a 3 to 4 cent in the
Rand dividend to concurrent creditors in each of the companies, the settlement
of the PCF and a portion of Tamela's pre-commencement debt. The employees
of both Wash and Liquids would be transferred to the Newco , thereby
preserving their ongoing employment.
[104] I understand that this proposal is the same proposal that was approved by the
creditors in Liquids and, as previously recorded, the approval of the business
rescue plan in Liquids is contingent on the approval of the proposed business
rescue plan in Wash.
[105] Ex facie the Proposed Plan, the value of Wash’s assets, as a t 5 September
2025, informs the purchase price.
[106] The immovable properties, said to be valued at fair market value as appraised
by WH Auctioneers is stated as being R 42.1 million. The movable property,
valued as before, is stated as being R 61.5 million. The book debts are valued
on a net estimate of the realisable amount thereof drawn from Wash’s latest
unaudited financial statements and are stated as being in the region of R 1.1
million (but expected to be nil in the future) . The stock, valued at its net
realisable value is approximately R 16.9 million and cash on hand (which is
decreasing) is R 1.5 million. Transferring IP and contracts are valued at nil.
[107] The Proposed Plan records, further, that
45
"22.9 Furthermore, in acquiring these assets Tamela inherits a significant need for
working capital financing , a backlog of capex for maintenance and repairs plus
further plant improvement required by the insurers (and which is currently
resulting in higher interim insurance costs/deductibles until remedied)."
[108] This conclusion appears to be correct. There has not been any cognisable
challenge thereto.
[109] An analysis of Wash’s recent trading and financial position s for the period
ending 28 February 2023, 2024, and 2025 (as stated in the proposed business
rescue plan ) reveals cost of sales between 75 % and 83% of revenue and
operating expenses between 22% and 38% of revenue. Salaries and wages
comprise between 23% and 26% of operating costs.
[110] Applying the formula working capital = total current assets (R34 385 991,00 as
at 31 July 2025) – total current liabilities (R290 400 730,00 as at 31 July 2025),
Wash currently requires working capital in the region of R136 million. If I
understand the Proposed Plan correctly, this will be funded by Tamela. As to
how this funding will flow to Newco, this is not stated.
[111] The BRPs provide a calculation as to the dividend that may be expected in
liquidation. Although subject to several key assumption including the
discounted prices that Wash’s assets may achieve, the recoverability of debts
due to Wash and the rate at which inventories may be recovered, a net amount
of between R1 838 560.00 and R2 423 200.00 will be available for distribution
- before payment to employee retrenchments costs and SARS - in the
cumulative sum of R70 449 887,00. This leaves a nil dividend to creditors.
46
[112] In the Proposed Plan, the BRPs explain the benefits of adopting the plan as
follows
"32.1. On the basis that the Rescue Plan is adopted at a meeting held for that purpose
and thereafter substantially implemented, the objectives of business rescue as
set out in section 128(1)(b)(iii) of the Act will have been met. Key benefits of
adopting this Rescue Plan include, inter alia:
32.1.1. the preservation of approximately 107 direct jobs and on average 82
outsourced staff (with a potential opportunity to further create jobs
given sub -scale operations currently and expectations for future
growth) — these in turn impact a number of households;
32.1.2. specifically for the town of Nigel, KTWD provides gainful employment
and contribution to the local environment and economy;
32.1.3. protection of the underlying IP and skill sets (including detergent
development and production/operating skills);
32.1.4. continued and increasing production (following the planned re -
commencement of production), benefiting suppliers in both the
continuity of off -take of goods and services from them and providing
customers with diversified choice, market segments ult imately for the
benefit of consumers;
32.1.5. depending on production mix, a key community of lower -income
households may benefit from production of blended product not
available elsewhere; and
32.1.6. possibility, given well-established research and development team, of
finding new product markets or types to further enhance the business
and industry as a whole.
32.2. From the perspective of benefit to the South African economy as a whole, there
are real advantages and benefits both at a macro - and microeconomic level for
locally produced detergent goods;
47
32.2.1 tax revenues will be created in the future for the benefit of the South
African fiscus;
32.2.2. additional South African products will be produced and these will again
fill up shelf space resulting in removal of foreign -produced products
from the shelves, enhancing the local economy and pride in South
African products;
32.2.3 proceedings are expected to result in a better recovery to creditors as
applicable than that which would result in the event if an immediate
liquidation; and
32.2.4. the Company will be left with no debt.
32.3. By stark contrast, a liquidation will likely permanently result in the loss of
remaining skills in this sector meaning that South Africa is unlikely at any time in
the future to be competitive in this industry but worst still, given the current
isolationist policies prevailing globally, be beholden to other countries and states
for these vital capabilities. The import of such products is costly and inefficient
and significantly less ecologically acceptable than a domestic, South African
manufactured product. Some of the KT Wash Detergent's products serve a lower
LSM market, who are already beleaguered by price inflation which would only be
worsened if a competitor like the business of KT Wash Detergents is lost."
[113] The BRPs explain the effect on Wash’s employees as follows
"33.1 This Rescue Plan (and the Proposal contained herein) provides for the disposal
of the Company's Business as a going concern to the Purchaser. As a result, all
employment contracts, together with the associated rights, obligations, and
conditions of em ployment, will be transferred to the Purchaser in accordance
with Section 197 of the Labour Relations Act, 1995 (Act No. 66 of 1995).
33.2. This transfer ensures that the employment relationships of all affected
employees are automatically continued with the Purchaser on terms and
conditions that are not less favourable than the current terms, subject to any
conditions that are not less favourable than the current terms, subject to any
lawful agreements reached through consultation between the parties.
48
33.3. The transfer will furthermore preserve employees' continuity of service and
accrued benefits.
33.4. The above remains subject to adoption of this Rescue Plan and subsequent
implementation of the Proposed Transaction."
[114] The effect on Wash’s shareholders is explained as follows
"34.1. This Rescue Plan does not alter nor impinge on the rights of the holders of any
class of securities in the Company.
34.2. Consequently, the approval of this Rescue Plan by the Creditors in terms of
Section 152(2) of the Act constitutes final adoption of this Rescue Plan."
[115] The BRPs identify certain risks to the proposed plan that are material to this
application
"40.2.2 loss of PCF from the PCF Lender were this Rescue Plan not to be adopted;
40.2.5 unforeseen litigation of whatsoever nature;
40.2.7. inability of the BRPs to secure sufficient PCF, for whatever reason(s) during the
period from Rescue Plan adoption to implementation. If the BRPs are unable to
cover all necessary costs, they will be obliged to convert the rescue Proceedings
into liquidation, notwithstanding an adopted Rescue Plan;
40.2.8. inter reliance of the [Wash] business rescue plan with that of [Liquids] given that
both are separate legal entities, however, at an operating level they are co -
located and interwoven in relation to suppliers, customers and staff."
[116] In the affidavit filed by the BRPs they place particular emphasis on PCF. They
state
49
"16. The importance of PCF cannot be understated. As in most business rescues,
PCF was and remain crucial for purposes of rescuing [Wash] and [Liquids], not
least of all to retain all staff and skills in this instance, cover the vital insurance
renewal of a ll assets and to cover 'mothball' operating fixed costs such as
electricity and 24/7 security as well as the brief production run referred to below.
17. As [Tamela] has correctly indicated in paragraph 42.2 of the founding affidavit,
that PCF, up to date of publication of the BR Plan, extended to some
c.R 65 million across [Wash] and [Liquids]. The PCF was utilised for purposes of
funding the initial production runs at the start of the business rescue (including
the purchase of raw materials and pack materials), the holding costs of the
operation during the temporary mothballing (which ranged from electricity
through to security and insurance expenses) as well as to pay staff to ensure
these vital skills and experience were preserved. This in turn allowed for the
BRPs to develop the BR Plan, investigate the affairs of [Wash] in terms of
section 141 of the Act, preserve value in the company and embark on an
expedited sales process, which I will return to.
18. Without the PCF, the BRPs would have had little choice but to conclude that both
[Wash] and [Liquids] were not capable of being rescued … and we would have
likely had to apply for the conversion of business rescue proceedings into
liquidation proceedings …"
[117] Wash’s PCF requirements are not an issue in these proceedings.
[118] Rather, two central controversies emerge from the creditors' answering
affidavits. They concern the value placed upon Wash’s assets by the BRPs and
with the calculation of the expected dividend in liquidation. The value placed on
Wash’s assets is central to this matter because it informs the price at which
Wash’s business is being bought. It also informs whether the Proposed Plan
Wash’s business is being bought. It also informs whether the Proposed Plan
favours Tamela to the disadvantage of Wash’s other creditors. Seen from this
perspective, the dividend calculations assume a great importance.
50
AECI’s central contentions
[119] AECI contends, based on a desktop valuation of the insurance replacement
costs of Wash's plant, equipment and immovable properties it caused to be
undertaken, that the asset value of Wash was approximately R750 million.
[120] The desktop valuation considers the acquisition of the business and assets by
the Newco for a purchase consideration of “only” R123.1 million, to be
"relatively paltry". It suggests that this acquisition represents an 84% discount
on the value of the replacement costs of the plant and properties which, even
with Tamela "writing-off" some R129.6 million of its pre-commencement claims,
Tamela will realise "a staggering nett financial gain of approximately
R497.95 million" while, at the same time requiring Wash's other 66% of its
creditors to be satisfied with a dividend of only 3 cents in the Rand.
[121] Thus, it contends, the Proposed Plan (and this application) is brought with the
ulterior purpose of securing "a sweetheart deal " whilst irreparably prejudicing
and short-changing Wash's concurrent creditors.
The Managements’ central contentions
[122] The Management, who take issue with the manner in which Tamela provided
PCF, contend that this has led to the decision to mothball the plant. They take
issue further with the BPRs for failing to consider other bids for the acquisition
of Wash's plant and equipment and identify "defects" in the Proposed Plan.
51
[123] The Management regard the dividend concurrent creditors will receive from the
Proposed Plan compared with that Tamela which will receive a far greater as
disproportionate and not leading to a balancing of all relevant stakeholders’
rights and obligations.
Manuchar’s central contentions
[124] The position adopted by Manuchar is that the dividend to current creditors "is
so negligible as to not be materially different from a nil return". It contends that
there are patent defects in the calculation of expected dividend to concurrent
creditors in liquidation as compared to that in business rescue.
[125] It contends, that a very "real possibility" exists that Wash's business may be
sold as a going concern for a better value through a liquidation process, while
highlighting that there have not been independent valuations undertaken of
Wash (and Liquids) business, meaning that the creditors have no means of
determining the reasonableness of the offer made by Tamela.
THE APPROACH TO THE QUESTION WHETHER THE VOTE WAS
“INAPPROPRIATE”
[126] The departure point on this part of the discussion is, necessarily, that the
business rescue process is creditor driven. The Supreme Court of Appeal in
52
Oakdene,53 in the context of section 131(4) of the Act and in considering what
"reasonable prospects " for the purposes of whether a financially distressed
company can be "rehabilitated" (as contemplated in section 128(1)(b) of the
Act) said,
"As I see it, the applicant for business rescue is bound to establish reasonable grounds for
the prospect of rescuing the company. If the majority creditors declare that they will
oppose any business rescue scheme based on those grounds, I see no reason why
that proclaimed opposition should be ignored. Unless, of course, that attitude can
be said to be unreasonable or mala fide. By virtue of s 132(2) (c)(i) read with s 152 of
the Act, rejection of the proposed rescue plan by the majority of creditors will nor mally
sound the death knell of the proceedings. It is true that such rejection can be revisited by
the court in terms of s 153. But that, of course, will take time and attract further costs.
Moreover, the court is unlikely to interfere with the creditors' decision unless their
attitude was unreasonable. In these circumstances I do not believe that the court a quo
can be criticised for having regard to the declared intent of the major creditors to oppose
any business rescue plan along the lines suggested by the appellants."54 (emphasis added)
53 Oakdene Square Properties (Pty) Ltd v Farm Bothasfontien (Kyalami) (Pty) Ltd and Others
2023 (4) SA 539 (GJ)
54 ibid at [38]
53
[127] There is no reason that these principles should not form the starting point of an
enquiry whether a vote on a business rescue plan is appropriate.
[128] As previously discussed, section 153(1)(b)(i)(bb) affords an Affected Person
the right to approach a court to have the result of a vote on a proposed business
rescue plan set aside on the ground that it was "inappropriate".
[129] Section 153(7) empowers a court to set aside such a vote. The subsection
provides:
"(7) On an application contemplated in subsection (1)(a)(ii), or (1)(b)(i)(bb), a court
may order that the vote on a business rescue plan be set aside if the court is
satisfied that it is reasonable and just to do so, having regard to -
(a) the interests represented by the person or persons who voted against the
proposed business rescue plan;
(b) the provision, if any, made in the proposed business rescue plan with respect to
the interests of that person or those persons; and
(c) a fair and reasonable estimate of the return to that person, or those persons, if
the company were to be liquidated."
[130] In KJ Foods ,55 the Supreme Court of Appeal consider ed the divergent
approaches taken by courts in their interpretations of section 153(1)(b)(i)(bb)
read with section 153(7) of the Act.
55 FirstRand Bank Ltd v KJ Foods CC 2017 (5) SA 40 (SCA) at [78] and [79]
54
[131] Its discussion leads, at the outset, to two guiding principles.
[131.1] The first of these guiding principles is that the term "inappropriate"
means "not suitable or proper in the circumstances".
[131.2] This indicates that the approach to matters of this kind requires
cognisance be had of the reasoning for the proposals contained in a
business rescue plan and of the competing rights and interests that
that arise in each matter which must be balanced i.e. the proposal
must be fair and reasonable in conceptualisation and execution.
[131.3] The second guiding principle is that creditors' right s to exercise their
votes freely and only to their benefit is attenuated by those competing
rights and interests.
[131.4] This conclusion finds support in the Cool Ideas56 principle of purposive
interpretation, regard being had to section 5(1) read with section 7(k)
of the Act.57
[132] A deeper analysis of KJ Foods KJ Foods and those decisions that follow upon
it, lead to a definitive framework as to the proper approach to the question
whether a vote on a business rescue plan should be set aside.
56 ibid
57 KJ Foods at [75] and [76]
55
[133] The majority judgment in KJ Foods refers to the earlier Limpopo High Court
decision in Copper Sunset where the High Court approached the question of
"appropriateness" solely from the perspective of the creditors that voted against
the plan. It is in this context that it said:
"[30] The purpose of the business rescue plan need not be to save the company from
liquidation and thus return the business to solvency. If the goal is just to ensure
a better return for creditors than would be achieved in liquidation, such goal is a
valid goal in terms of the Act. In the present case it is common cause that in the
event of liquidation of the applicant only the first respondent, as a secured
creditor, will get a dividend of R0,45 in the rand and the rest of the concurrent
creditors totalling about R8 million will get no dividend at all. The question then
arises as to whether a business rescue plan is not an option worth trying."
[134] The High Court in Copper Sunset found the attitude of certain creditors to be
"unreasonable" or "irrational" where the major creditors, being the two
respondents, voted against the adoption of the proposed plan. In liquidation,
the first respondent, as a secured creditor, would receive a dividend of R 0,45
in the Rand and the concurrent creditors, which included the second
respondent, would not receive any dividend. 58 The failure of these creditors to
have regard to the position of the applicant’s employees featured strongly in the
High Court’s criticism. On this basis, it found the rejection of the business
rescue plan to be inappropriate.59
58 ibid at [30] and [37]
59 ibid at [38]
56
[135] The subsequent Gauteng High Court decision in Berryplum60 disagreed with
the approach taken in Copper Sunset. The Court in Berryplum held:
"The purposes of business rescue, broadly stated, are to revive faltering companies or
achieve improved dividends for those companies which cannot be revived; in short, to put
more money in the pockets of affected persons in general. In this context the interests
of creditors, whose own money is at risk, are predominant. Whether either of these
results can be achieved in a particular case depends on a forecast, which itself is
based on one or more assumptions; in short on an assessment of risk. The business
of companies and their creditors, in the present context, is the pursuit of monetary profit. I
do not think that the purposes of the new Companies Act will be advanced by
vesting in the courts a power to impose upon business people financial risks which
they, on honest reflection, judge ill advised."61 (emphasis added)
[136] Berryplum holds then, that the factors listed in section 157(7)(a) to (c) of the
Act should be viewed purely from the perspective of those creditors who voted
against the plan. Inferentially, the interests of non-creditor stakeholders, which
include the employees, ought not to be directly considered.
[137] The minority judgment in KJ Foods preferred the two -step process in
Berryplum that a court should first decide whether the vote was inappropriate
and then move on to decide whether it is reasonable and/or just to set it aside.62
60 Shoprite Checkers (Pty) Limited v Berryplum Retailers CC and Others [2015] ZAGPPHC 255
(11 March 2015)
61 ibid at [38]
62 Ibid at [29]
57
[138] The majority judgment in KJ Foods, did not discuss the decision in Berryplum
directly but disagreed on the two-step process.63
[139] The majority in KJ Foods requires a single enquiry and value judgment to be
undertaken by the court. 64 They hold that a court is required to consider the
matter from the perspective of those who voted against the business rescue
plan and consider whether the rights and interests of all relevant stakeholders
(which necessarily includes the employees) are balanced. In that balancing, the
position of creditors where the distressed company continues in business
rescue or goes into liquidation.65
[140] Accordingly, the approach taken in Berryplum is not consonant with that taken
in KJ Foods because Berryplum does not consider whether a business rescue
plan appropriately balances all the relevant rights and interests.
[141] The majority in KJ Foods went on to find that the basis upon which the vote
against the business rescue plan had been rejected was unfounded . It
considered it reasonable and just that the vote be set aside.66
63 ibid at [50]
64 ibid at [80]
65 ibid at [75]
66 ibid at [86]
58
[142] In the later Supreme Court of Appeal decision in Ferrostaal67 the approach
taken was to consider the appropriateness of the vote from the perspective of
the majority creditor that had voted against the implementation of the plan. In
Ferrostaal, there were no employees whose interests needed to be
considered.68
[143] The Supreme Court of Appeal’s reference to employees n Ferrostaal is further
strong support for the conclusion I have reached in relation to Berryplum not
being readily capable of support to the extent that it excludes any consideration
of the rights and interests of non-creditor stakeholders from the single value
judgment the court is required to make.
[144] I take further guidance from the High Court decision in Reiscor Two69 which
holds, with reference to Ferrostaal, that the meaning to be given to the term
"inappropriate" should be one that gives effect to the wider context and objects
of business rescue in a manner that balances the rights and interests of
shareholders.70 This is consonant with the approach of the majority in KJ
Foods.
67 Ferrostaal GmbH and Another v Transnet Soc Ltd t/a Transnet National Ports Authority and
Another 2021 (5) SA 493 (SCA)
68 ibid at [19]
69 Reiscor Two (Pty) Ltd (in Business Rescue) v Anheuser -Busch Inbev Africa (Pty) Ltd and
Others 2025 (1) SA 315 (GJ)
70 ibid at [27]
59
[145] The court in Reiscor Two identified that there is an important distinction
between "rights" and "interests" concluding that:
"Even where rights are not implicated but interests are, this may be sufficient to tilt the
conclusion on appropriateness of a business rescue plan."71
[146] I understand the High Court to say that, while it is the creditors’ rights that are
most squarely under consideration in cases such as this, stakeholder interests
may be such that more weight should be afforded to them when , when
appropriate, to balance the rights and interests of all relevant stakeholders as
KJ Foods requires.
[147] I conclude then, that the correct approach to the value judgment (or
discretionary power) that falls to be exercised by the court is informed by the
reasons given for the rejection of the proposed business rescue plan, weighed
against any benefits of liquidation with due regard having been had to the
purpose of business rescue as contemplated in section 7(k) of the Act . This
requires that a business rescue plan be fair to all stakeholders. For this
purpose, the position of employees must form part of the balancing exercise.
[148] The authorities I have reviewed above demonstrate that the application of these
principles will depend on the facts of a particular matter.
71 ibid at [27]
60
WAS THE VOTE TO REJECT THE PROPOSED PLAN INAPPROPRIATE IN THE
CIRCUMSTANCES?
[149] I summarised the position taken by AECI, the Management and Manuchar
above. In accordance with KJ Foods and Reiscor Two , I approach the
question whether the rejection of the Proposed Plan was inappropriate in the
circumstances from the perspective of AECI, the Management and Manuchar.
[150] The primary basis upon which they voted against the Proposed Plan is an
absence of facts to support it. The criticism primarily, is that Wash's assets are
understated in the Proposed Plan and the comparative dividend between the
business rescue and liquidation scenarios are incorrect or deficient.
[151] AECI sought a postponement of the meeting. It s answering affidavit does not
state the basis upon which it intended seeking that postponement recording
only that the BRP summarily refused to entertain th is postponement without
enquiring as to the reasons for the request. In agree with Mr Daniels SC that
an unmotivated request for a postponement is insufficient for it to be tabled for
a vote.
[152] The Management had, some days prior to the meeting , also requested a
postponement of the meeting. They addressed, through their attorneys, a
lengthy letter to the BRPs’ attorneys setting out various matters arising from the
Proposed Plan that concerned them. This was met by an equally lengthy letter
61
from the BRPs’ attorneys. The gravamen of the response to the Management
was that they had failed to properly understand the Proposed Plan.
[153] At the meeting, the Management presented a motivated motion for the
postponement of the meeting citing, inter alia , that the Proposed Plan is
materially incomplete and incapable of meaningful assessment on the because
it does not contain an operational turnaround or restructuring strategy ; it
provides no detail on how Wash (or Liquids ) will achieve solvency post
implementation in the absence of a forward looking business model; a delayed
or inadequate disclosure of material information including cash flow projections
and the comparative analysis between a business rescue and liquidation
scenario; the absence of an explanation as to how the assets, liabilities,
operational continuity or creditors’ rights created by the separation of Wash and
Liquids’ businesses through the separate business rescue processes would be
affected; and that they believed that further alternative rescue proposal s and
funding arrangements are being finalised and will be put to the BRPs.
[154] A further creditor, that does not participate in these proceedings, Aleka
Logistics (Pty) Ltd, also sought a postponement to allow it to comment and
make recommendations to the BRPs on amendments to the proposed business
rescue plan.
[155] The BRPs refused to table a motion for the postponement of the meeting. The
reason given by the BRPs was informed by their interactions with creditors who
sought a greater dividend payment. The BRPs say that the creditors, in so
62
doing, did not have regard to the wide and inclusive nature of the proposed
business plan that would ensure the preservation of jobs, ongoing trade and
Wash's business status. The BRPs indicate further that the dissenting creditors
appear to have been approached by a third party claiming that the offer the third
party proposed making to the BRPs could offer the creditors a better return.
[156] In this context, the BRPs said:
"74. It is on this basis that we understood that block creditors or at least the bulk of
them, where in favour a postponement of the s151 meeting. What was however
not considered by them in our view where the viability and executability of any
such offer. More importantly is a lack of clarity on the timing of such offer(s)
coupled with the consequences of any such offeror being unable or unw illing to
provide PCF which would have left an unfunded business for an indeterminable
period time and which would have led to staff retrenchments and a possible
reconsideration by us as BRPs as to whether [Wash] remained capable of being
rescued. It is my and my fellow BPR's view that these block creditors were, as
late as in the actual s151 meeting, misinformed [by the alleged hire offer] and
indeed that funding had been secured to immediately support it."
[157] They state, further:
"85. At the time of the s151 Meeting and the conducting of the vote, we as BRPs had
no other executable transaction to propose to creditors that would result in the
successful rescue of the [Wash] business. I have demonstrated above that any
purported alternative offer was simply not an offer at all, lacked proof of available
funding and that we could not, in line with our duties, propose any such offer.
86. Moreover, we were faced with the situation where further PCF funding of
approximately R7 million to R8 million per month for employee and critical
operational costs would be necessary to sustain the business and ensure the
safeguarding of employment."
63
[158] The Management, relying on Reiscor Two ,72 contends that the creditors
enjoyed an absolute right to have the motion for a postponement put to the
meeting for the creditors vote thereon.
[159] The point that the Management simply makes is the BRPs acted unlawfully in
not putting the motion/s for an adjournment to the creditors for a vote.
[160] AECI makes a similar point. It contends that the BRPs violated its rights in terms
of section 151(2)(d) of the Act, and for this reason, it considers the vote to reject
the proposed business rescue plan appropriate and reasonable in the
circumstances.
[161] In argument, Mr Daniels SC advanced a proposition along the line that the
creditors had some notice of the meeting, that they had been in possession of
the Proposed Plan since well ahead of the meeting and had not come forward
with comments or proposed amendments prior to the eve of the meeting. So ,
as I understood him, there would have been nothing to gain from a
postponement of the meeting.
[162] In respect of this issue, I take guidance from the decision in Reiscor Two.
72 ibid at [55]
64
[163] In Reiscor Two the court discussed the postponement of creditors’ meetings
called for purposes of considering a business rescue plan as contemplated in
section 152 of the Act and said:
"[55] What is, however, of considerable importance is how a postponement is to be
secured and whose decision that is. The process is quite evidently creditor
driven and what the major creditors overlooked is that the permission of
the business rescue practitioners is not required. The creditors have the
absolute right to adjourn the meeting in terms of section 152(1)(d)(ii) of the
New Act. If a motion is moved to adjourn the meeting to revise the plan for
further consideration the business rescue practitioners ar e obliged to
entertain it and to conduct a vote on it. It follows from the express wording of
section 152(1)(d)(ii) that the business rescue practitioners have no ‘right of veto’
and that they must postpone the meeting if the creditors vote in favour of such
an adjournment.
[56] One wonders why the major creditors did not postpone the meeting. The
business rescue practitioners suggest that it is because the major creditors had
no intention of coming up with solutions that would address their concerns but
were intent on puttin g the company into liquidation to conduct enquiries which
would be funded by all proved creditors. It is difficult not to conclude that this is
the most plausible reason why this powerful tool, one where a postponement
was there for the taking, was not utilised." (emphasis added)
[164] In my view, the BRPs ’ refusal to entertain motions for a postponement and
insistence that the Proposed Plan be put to a vote is not just a procedural
irregularity; it is a substantive issue which goes to the core of this matter.
[165] At issue is whether the critical information the creditors contend is material to
proper decision-making was available to them. This includes facts as to whether
a proper valuation of Wash's business and assets was conducted and whether
65
the dividend calculations (the last mentioned being a requirement the Act ) is
correct and sustainable.
[166] I am acutely aware of the nature of a business rescue plan as described in
Reiscor Two as not being a pleading or legal document rather a document
prepared for consideration by business people where the hearsay rule and
similar evidentiary rules do not find application.73 The difficulty, as I understand
the position, is that the Proposed Plan sets out the BRPs’ findings and
conclusions without an explanation as to how these findings and conclusions
were reached.
[167] The creditors’ issue is that the facts which underpin these findings and
conclusions are not available to them to test. As a result, each of the creditors
contend that their vote against the proposed business rescue plan was
appropriate in the circumstances. Those circumstances being the absence of
facts that they required for their decision-making.
[168] In the circumstances of this matter, the creditors are correct.
[169] I find support for this conclusion in section 150(2) of the Act which stipulates
that a business rescue plan must contain all the information reasonably
73 ibid at [61]
66
required to facilitate Affected Persons decision-making in relation to whether or
not the proposed plan ought to be accepted or rejected.
[170] The level of detail required in a business rescue plan will depend on the nature
and complexity of the proposed plan.
[171] In Beginsel,74 the Western Cape High Court held that section 150(2) sets out
the requirements of a business rescue plan in general terms, that the content
will differ from case to case and that the acid test is whether there is “sufficient
information, along the lines envisaged by s 150(2), has been provided to enable
interested parties to take an informed decision in considering whether a
proposed business rescue plan should be adopted or rejected” . In that matter,
it was found that “the proof of the pudding is in the eating” as 99% of those
present at the meeting voted in favour of the plan.
[172] If that logic is applied to the present case, the Proposed Plan is prima facie
problematic. The Proposed Plan garnered only a little over 50% of the vote.
[173] The Proposed Plan contemplates the sale of Wash's business, as a going
concern, to Tamela. To my mind, an independent valuation of Wash's business
was required. The BRP's cannot be criticised for seeking out a suitor to
purchase this business through an expedited sale. It is commendable that they
74 Commissioner, South African Revenue Service v Beginsel N.O and Others 2013 (1) SA 307
(WCC) at [37] to [39]
67
have achieved this. But, the creditors cannot be left in the dark as to how the
sale price was determined. A business rescue plan must of necessity, set out
how the rights and interests of stakeholders have been balanced for the
purpose of section 150(2) to be achieved.
[174] Tamela deals with this as follows in its replying affidavit
"20.7 The suggestion that the R123 million purchase price represents an "84%
discount" or a "bargain-basement" acquisition ignores both the context and the
realities of a distressed sale. The notional replacement values cited by AECI bear
no relation to achievable realisations in a business rescue or liquidation scenario.
In any distressed process, assets are valued on a going -concern or forced-sale
basis, and not on theoretical new-build or insured replacement figures.
20.8 The proposed consideration of R123 million cannot be viewed in isolation. The
contention that Tamela would somehow benefit at the expense of other creditors
ignores that Tamela has already advanced more than R70 million in post -
commencement funding to sustain KT Wash, and that it will write off in excess of
R130 million of its pre-rescue debt under the Plan.
2.9 Tamela's offer was the only one that was fully funded, approved by the
competition commission, and capable of immediate implementation. It included
not only a cash purchase consideration but also the assumption of operational
costs, working capital support, and ongoing post -commencement funding. The
Plan, as approved by the Practitioner s, provides for the extinguishing of
significant secured debt and the preservation of employment (all of which
contradict AECI's characterisation of the transaction as a "financial windfall").
20.12 AECI's characterisation of Tamela's bid as an attempt to acquire the KT Wash
business at a "embarrassingly discounted price" is incorrect and misleading. The
offer was made at a fair market value in the prevailing context which was aligned
offer was made at a fair market value in the prevailing context which was aligned
with the value arrived at by an independent expert appointed by the Practitioners,
as recorded in the Plan. The fair market value was not de termined by Tamela,
but by that independent valuation process, which considered the financial
position of the company, the pr evailing market conditions, and the distress
context in which would occur. Tamela's proposal therefore reflects a fair and
68
commercially reasonable v alue, consistent with the objective of achieving the
best outcome for all affected persons compared with liquidation."
[175] The only indication of an "independent" valuation that I can find in the founding
affidavit or the Proposed Plan is the valuation of Wash's assets that was
conducted by WH Auctioneers. This is not a necessarily valuation of Wash's
business.
[176] Tamela does not adduce any facts in its founding affidavit as to how the
purchase price came to be calculated. This is the lacunae that permeates
through this entire matter. In my view, the case Tamela was required to make
out in its founding affidavit was that the Proposed Plan fairly balanced all
stakeholder rights and interests. The focus in the Proposed Plan on the benefits
thereof to employees and the greater economy of the area in which Wash
operates, whilst important and laudable, without showing how it is fair to all the
creditors, does not satisfy the underlying principle.
[177] To the extent that the purchase price was determined on an asset -based
approach it is unclear whether that is the correct approach to the valuation of a
business being sold on a going -concern basis. I cannot find any explanation
why the other accepted appr oaches to business valuation, which include the
discounted cashflow approach, the market approach, utilising price to earnings
ratios or revenue revenues or an earnings-based approach using
industry-appropriate multiples were not followed. This is not trav ersed in
Tamela’s founding affidavit. The BRPs do not deal with this issue either.
69
[178] One can readily understand, in the circumstances, the scepticism expressed by
AECI, the Management and Manuchar. On the facts, I cannot find any support
for the basis upon which the sale price of Wash’s business to Newco was
determined.
[179] In these circumstances, the criticism of the dividend calculation is well -made.
The calculation which forms part of the Proposed Plan contemplates, only, a
dividend that may be achieved through a fire -sale of Wash's assets. The
difficulty is that none of t he facts which underpin the values utilised in that
calculation are apparent.
[180] The learned authors of Henochsberg, in their commentary on section 153(7),
and with reference to Reiscor Two opine that:
"It is 'inappropriate' to vote against a plan that would obtain a better result for the company's
creditors or shareholders than a liquidation would produce if the basis is that more
information is required, as a failure by the major creditors to have postp oned the meeting
and their failure to have suggested amendments to the plan to deal with their concerns, all
of which contribute to the conclusion that voting against the implementation of the plan
was inappropriate. The concerns could and should have bee n dealt with by way of
postponing the meeting and by making constructive suggestions to address their
concerns."
[181] The view expressed, aforesaid, cannot be considered a general rule. In the
ordinary course, where deficiencies in a business rescue plan are identified and
require attention from the practi tioners, a postponement for these purposes is
apposite. But, in the instant case, a postponement was not tabled for
70
consideration and a vote against a business rescue plan in such circumstances
cannot be said to be per se inappropriate.
[182] In respect of the Management’s complaint that further offers were not
considered by the BRPs and a further potential offer was in the offering; I
consider the potential "new" offer to be res inter alios acta . It may or may not
have eventuated and may or may not have had the necessary financial backing
to afford the necessary PCF to Wash. As at the date of the meeting, that "new"
offer was no more than a spes.
[183] Accordingly, where there are not facts to support the basis upon which the sale
price of Wash’s business was established and the basis of the dividend
calculation made clear, I am unable to find that the vote against the Proposed
Plan was inappropriate; that which is contained in the Proposed Plan, without
more, makes it very difficult to understand how the Proposed Plan can be said
to properly balance the rights and interests of Affected Persons.
71
THE CREDITORS’ RIGHTS AT THE RESUMED MEETING
[184] The final issue that I am required to determine, having found against Tamela
on the issue of appropriateness, concerns the resumed section 152 meeting.
[185] In Tamela’s supplementary heads of argument, Mr Daniels SC contends, with
reference to the Supreme Court of Appeal’s decision in Vantage,75 that the only
issue before me concerns whether the vote on the proposed business rescue
plan was appropriate; the proposition being that any consideration of the parties
position at the resumed section 152 meeting would be “a regrettable overstep
of judicial powers.”
[186] As a general proposition a court should not stray beyond the dispute it is
required to determine. In this issue the law is clear. The Supreme Court of
Appeal’s decision in Fischer76 is instructive on that with which a court may
competently engage. It held
"[13] Turning then to the nature of civil litigation in our adversarial system, it is for the
parties, either in the pleadings or affidavits (which serve the function of both
pleadings and evidence), to set out and define the nature of their dispute, and it
is for the court to adjudicate upon those issues. That is so even where the dispute
involves an issue pertaining to the basic human rights guaranteed by our
Constitution, for '(i)t is impermissible for a party to rely on a constitutional
complaint that was not pleaded'. There are cases where the parties may expand
those issues by the way in which they conduct the proceedings. There may also
75 Vantage Goldfields SA (Pty) Ltd and Others v Argomanzi (Pty) Ltd [2022] ZASCA 185 (22
December 2022) at [16]
76 Fischer and Another v Ramahlele and Others 2014 (4) SA 614 (SCA)
72
be instances where the court may mero motu raise a question of law that
emerges fully from the evidence and is necessary for the decision of the case.
That is subject to the proviso that no prejudice will be caused to any party by its
being decided. Beyond that it is for the parties to identify the dispute and for the
court to determine that dispute and that dispute alone.
[14] It is not for the court to raise new issues not traversed in the pleadings or
affidavits, however interesting or important they may seem to it, and to insist that
the parties deal with them. The parties may have their own reasons for not raising
those issues. A court may sometimes suggest a line of argument or an approach
to a case that has not previously occurred to the parties. However, it is then for
the parties to determine whether they wish to adopt the new point. They may
choose not to do so bec ause of its implications for the further conduct of the
proceedings, such as an adjournment or the need to amend pleadings or call
additional evidence. They may feel that their case is sufficiently strong as it
stands to require no supplementation. They may simply wish the issues already
identified to be determined because they are relevant to future matters and the
relationship between the parties. That is for them to decide and not the court. If
they wish to stand by the issues they have formulated, the c ourt may not raise
new ones or compel them to deal with matters other than those they have
formulated in the pleadings or affidavits.
[15] This last point is of great importance because it calls for judicial restraint. As
already mentioned Gamble J 'required' the parties to argue as a preliminary issue
what he described as two issues of legality. Although he added that the parties
were amenable to these proposals, counsel who appeared in this court and in
the court below confirmed that the judge's own description, that he 'required' the
the court below confirmed that the judge's own description, that he 'required' the
points to be argued, was accurate. They were not asked for their submissions on
whether this was an ap propriate approach to the matter, or even (which was
more pertinent) whether either question was in issue in the case. Nor were they
asked whether their clients agreed to broaden the issues to encompass these
points. The authority on which the judge relied in adopting this approach was not
in point. That was a case where the court, on the application of one of the parties,
held that it could dispense with the hearing of oral evidence, notwithstanding the
case having been referred for the hearing of such evi dence, because the
questions raised on the papers could be determined without hearing such
evidence and the evidence could not affect the resolution of those issues. It is a
far cry from that for a court to raise issues that do not emerge from the papers
73
and have not been canvassed in the affidavits and require that those be argued
instead of hearing oral evidence and deciding the issues raised by the parties. "
(footnotes omitted)
[187] Mr Daniels SC’s point, in Tamela’s supplementary heads of argument, is
"37 None of the other parties have launched an application to set aside the decision
by the [BRPs] to the effect that there was "not a proper motion" for postponement
under section 152(2)(d)(ii), or the refusal to put the postponement motion to the
vote."
[188] As a statement of fact, Mr Daniels SC is correct. There is no challenge to the
BRPs’ refusal to put the motion for a postponement to a vote. In my view,
however, both the reliance on Vantage and the proposition surrounding the
BRPs’ failure to have entertained the motion for a postponement, misses the
point.
[189] It is Tamela’s case that, if it fails in this application, the BRPs will be constrained
at the resumed section 152 meeting to notify Affected Persons that business
rescue has failed and proceed to file a notice in accordance with section 153(d).
[190] In its founding affidavit, Tamela says in relation to the consequences of the
Proposed Plan being rejected, that
"138. The [BRPs] communicated to the affected persons that in their view, there would
not be any merit in seeking a vote to prepare and publish a revised business rescue
plan, as envisaged in section 153 of the Companies Act.
139. The applicant then communicated its intention to proceed with this application. As
such, and in accordance with section 153(2)(a), the [BRPs] adjourned the Meeting
for a period of five days to enable the applicant to institute this application.
74
140. Had the applicant not communicated this intention, the [BRPs] would have been left
with no alternative but to "promptly file a notice of the termination of the business
rescue proceedings" as provided for in section 153(5) of the Companies Act and the
liquidation of [Wash] will follow. This will have all the devasting consequences
outlined in this affidavit."
[191] The issue of the consequences of Tamela’s application failing is squarely raised
in the papers.
[192] Mr Hoffman, in the Management's first heads of argument, advanced a
proposition in opposition to Tamela's contention that the BRP's are required to
give notice of termination of the business rescue proceedings in Wash.
Mr Hoffman argues that the premise of Tamela's conclusion is incorrect
because the meeting was only adjourned and not closed. So, he reasons, the
BRP's may seek approval from those Affected Persons, entitled to exercise a
vote, to publish a revised business rescue plan and that the meeting may further
be adjourned, at the behest of creditors, for the preparation of a revised plan
and further consideration. Mr Hoffman's argument is founded on the language
employed in section 153(1)(a)(i) and 153(1)(b)(i) of the Act.
[193] In the Management's supplementary heads of argument, Mr Hoffman expands
on this proposition by arguing that, in the event of Tamela failing in this
application, the meeting reconvenes at which time the Affected Persons may
table a motion requiring the BRP's to prepare and publish a revised plan. If no
such motion is tabled, it is only then that the provisions of section 153(5) will be
applicable and oblige the BRP's to file a notice of termination of business rescue
proceedings. If, however, the motion passes, then section 153(3) finds
75
application. In that event, the BRP's must close the meeting, prepare and
publish a new or revised business rescue plan within 10 days and the provisions
of Part D of Chapter 6 start afresh. Again, if the motion fails, section 153(5) is
applicable.
[194] Then, with reference to the decision in Louis,77 Mr Hoffman argues that
Tamela's reliance on the principle in Louis is incorrect because the facts in this
case differ materially from that in Louis.
[195] Mr Hoffman argues that Louis concerned an entirely disparate situation where
the appellant, having exercised its rights in terms of section 153(1)(b) of the Act
was held not to have an entitlement to exercise a different right because, if this
were correct, a never-ending loop of proposals, rejections, and revisions would
arise.
[196] Mr Hoffman reasons that the Affected Persons, having been deprived of an
opportunity to vote for the adjournment of the meeting, have not exercised their
right to table a motion calling for the BRP's to prepare and publish a revised
business rescue plan . He argues, further, that a conclusion which prevents
such an opportunity leads to an absurdity that could not have been
77 Louis N.O and Others v Fenwick N.O and Others 2023 (6) SA 400 (SCA)
76
contemplated. In short, the legislation has failed to cater for the scenario that
has arisen.
[197] The stance taken by AECI, in relation to Louis, is that it neither concerned nor
considered the consequences of a dismissal of an application under
section 153(1)(b)(i)(bb).
[198] Mr Amm SC, in AECI's supplementary heads of argument makes the point that
Louis only dealt with the scenario of the same Affected Person seeking to
exercise multiple remedies under section 153(1)(b) of the Act. He argues that
the ratio in Louis is not to the effect that once one Affected Person has
exercised and exhausted their remedy under section 153, that all other Affected
Persons are automatically precluded from exercising their rights. The
proposition he advances on behalf of AECI is as follows:
"67. In fact, Louis acknowledges that "once...the parties have unsuccessfully
exhausted their remedies as provided for in section 153(1)(b), business rescue
must come to an end '. We submit however that the "exhausting of remedies "
must be understood and interpreted fairly and equitability meaning that each
affected person must be afforded the opportunity to exercise their statutory.
rights and options, if they so wish. If they do not wish to exercise their remedies
under section 153(1), then the practitioner must proceed, as expressly provided
for, in terms of section 153(5).
68 We submit that to interpret Louis or section 153 of the Companies Act, 2008 as
meaning that the dismissal of one affected person's 153(1)(b)(i)(bb) application
automatically brings the entire business rescue to an end would unfairly deprive
the remaining creditors and affected parties of their rights to act under section
153. That interpretation would unfairly close the door on them prematurely and
would be inconsistent with the participatory spirit and purpose of business rescue
77
proceedings, particularly in large and complex business rescues involving
numerous creditors and affected persons.
69 We submit that it cannot have been the intention of the legislature that only one
affected person may exercise a right under section 153 to the exclusion of all
others. Such an interpretation would be illogical and unbusinesslike."
[199] Mr Amm SC's construction of section 153 is substantially the same as that
advanced by Mr Hoffman. Mr Amm SC encapsulates, in succinct terms, the
consequences of Tamela failing in its application as follows:
"79. In summary, we submit that if Tamela's application is dismissed, then the section
151 meeting must resume and (i) the business rescue practitioners must report
on the outcome of the application; and (ii) the remaining creditors and affected
persons (bu t not Tamela — who has already exercised its section 153(1)(b)
rights) must be afforded an opportunity to exercise their section 153(1)(b) rights.
80. In closing, we submit that it is only if none of the remaining creditors or affected
persons wish to exercise their section 153(1)(b) rights, that the business rescue
practitioners must then proceed in terms of section 153(5) and file a notice of
termination of the business rescue proceedings."
[200] Mr Daniels SC argues that the construction placed on section 153 of the Act by
the Management and AECI is incorrect. He advances a proposition that section
153(1) provides for two options, being for the practitioner to take certain steps,
filing which, for an Affected Person to take those steps. And, on the strength of
Louis, that the interpretation contended for by AECI and the Management is
78
unsustainable. In this regard, particular emphasis was placed on paragraphs
[11] and [12] of Louis together with the conclusion in paragraph [14] that
“…once a business rescue plan has been put to the vote and rejected as contemplated in
s 152 of the Act and, the parties have unsuccessfully exhausted their remedies as provided
for in s 153(1)(b), business rescue must come to an end.”
[201] Mr Daniels SC referred, further, to Landosec78 and Rogal Holdings79 in support
of the proposition he advances.
[202] None of these decisions to which Mr Daniels SC refers appear to deal with that
which has arisen in this matter.
[203] The decision in Louis, as I understand it, deals with an instance where a
binding offer to acquire a voting interest has been rejected leading to voting
rights being unaltered. The real point in Louis is that an absurdity would arise
if the relevant creditor whose binding offer had been rejected could call for the
approval of a revised plan or apply to court to set aside the original vote. The
premise being that the voting rights that would otherwise h ave occasioned a
new vote have not changed. This informed the conclusion that
“[15] In sum, it could not have been the legislature's intention that a party whose
voting interests remain unaltered, as a result of the rejection of a binding offer,
would be entitled to a further opportunity to exercise one of the alternatives
78 Landosec (Pty) Ltd v McLaren 2017 JDR 1492 (ECP) at [6] and [8]
79 Rogal Holdings (Pty) Ltd and Another v Victor Turnkey Projects (Pty) and Others [2022]
ZAGPPHC 176 (28 March 2022) at [37] and [42] and [43]
79
provided for in s 153(1) (b)(i) of the Act . The interpretation contended for by the
appellants simply does not amount to a sensible and businesslike interpretation of
s 153(4), and would cause, as pointed out by this court in FirstRand Bank Ltd v KJ
Foods CC, a 'never-ending loop'. For these reasons we conclude that s 153(4) of
the Act only finds application when a binding offer in terms of s 153(1) (b)(ii) is
accepted.” (emphasis added, footnotes omitted)
[204] Landosec concerned a practitioner’s powers after a business rescue plan was
rejected and no instructions given to the practitioner who, after having given
notice terminating business recue proceedings continued to act qua
practitioner. Here the court found that the practitioner was functus officio upon
giving the notice of termination.
[205] Rogal Holdings deals with a situation where a business rescue plan was
rejected and the rights or remedies in section 153 were not pursued. This
decision refers to Agri Oil Mills80 which deals with the same situation. Here it
was held that, because no person took any action contemplated in s 153 (1),
the practitioner was obliged to file a notice of termination. Neither decision deals
with what happens where an application to set aside a vote in terms of section
153 is unsuccessful, the meeting has not been closed and further directions not
given to the practitioners.
[206] I agree with the interpretation of section 153 advanced by Mr Hoffman and Mr
Amm SC. There is no reason that the meeting cannot be resumed, the creditors’
80 The Land and Agricultural Development Bank of South v Agri Oil Mills (Pty) Ltd 2021 JDR
1238 (KZP)
80
difficulties addressed and, to the extent necessary the BRPs instructed to
prepare a revised plan. Should this not eventuate, the BRPs will be required to
perform their statutory duties and terminate the business rescue in Wash.
[207] The outcome postulated above prevents Affected Persons’ rights to participate
fully in business rescue proceedings being denuded. I do not see any absurdity
in the outcome contended for by the Management and AECI. To my mind, it
gives effect to the purpose of the statutory arrangement.
CONCLUSION
[208] In the course of this lengthy judgment, I have set about to extract principles
from earlier decisions to inform a jurisprudentially sound approach to the
novelties and complexities that have arisen in this matter.
[209] The single value judgment I have been called upon to make, based on the
principles I have found to have been established, has required and resulted in
an overall evaluation of the Proposed Plan and an interrogation of whether the
conclusions set out therein can and should, simply, have been accepted at the
meeting by Wash's creditors. I have concluded that th e Proposed Plan does
not set out the basis for the findings and conclusions set out therein. As such,
it cannot be determined, ex facie Proposed Plan, that a proper balance has
been achieved.
81
[210] I have concluded, further, that Wash’s creditors are entitled to insight of the
facts that led to the conclusions embodied in the Proposed Plan and which form
the basis of the case made out by Tamela in its founding affidavit.
[211] Tamela's founding affidavit is, substantially, a narrative advancing the same
conclusions in the Proposed Plan . It does not provide insight into the
conclusions set out in the Proposed Plan. And, even if it had, the question
whether this would not have been of any real assistance because the
"appropriateness" of the vote must be adjudicated at the time the vote took
place and with regard to the facts that the parties had at the time , still arises.
But this is an issue for another court in due course.
[212] Very substantial time and effort has been dedicated, in this judgment, to the two
in limine points that were taken, improperly, having not been traversed in
answering affidavits and for the detailed reasons advanced, are unsustainable
if not ill -conceived. These points distracted from and took away from the
expeditious and efficient determination of the two real points that arose in this
matter.
[213] Accordingly, and while this is a matter where costs follow the event, the costs
that AECI should be entitled to recover fall to be limited to two-thirds.
82
[214] In the result, I make the following order:
1. Condonation for the late deliver y of affidavits and the delivery of
supplementary affidavits is granted.
2. The application is dismissed.
3. The applicant is directed to pay the respondents' costs, including the costs
of two counsel where so employed, on scale C, save that the costs of the
fifth respondent's payable by the applicant is limited to two-thirds of that
allowed by the Taxing Master.
A W PULLINGER
ACTING JUDGE OF THE HIGH COURT
GAUTENG DIVISION, JOHANNESBURG
This judgment was handed down electronically by circulation to the parties’ and/or
parties’ representatives by email and by being uploaded to CaseLines. The date and
time for hand-down is deemed to be 10h00 on 12 December 2025.
DATE OF HEARING: 16 OCTOBER 2025
DATE OF JUDGMENT: 12 DECEMBER 2025
APPEARANCES:
COUNSEL FOR THE APPLICANT: AJ DANIELS SC
83
CT VETTER
ATTORNEY FOR THE APPLICANT: BOWMAN GILFILLAN INC
COUNSEL FOR THE 5th RESPONDENT: GW AMM SC
SG DOS SANTOS
ATTORNEY FOR THE 5th RESPONDENT: WEBBER WENTZEL
COUNSEL FOR THE 12th RESPONDENT: DWD ALDWORTH
ATTORNEY FOR THE 12th RESPONDENT: NORTON ROSE FULBRIGHT
SOUTH AFRICA INC
COUNSEL FOR THE 22nd AND 23rd
RESPONDENTS: JM HOFFMAN
P SILA
ATTORNEY FOR THE 22nd AND 23rd
RESPONDENTS: WITZ INC