SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
THE HIGH COURT OF SOUTH AFRICA
(NORTHERN CAPE DIVISION, KIMBERLEY)
CASE NO: 2040/2022
Reportable: YES / NO
Circulate to Judges: YES / NO
Circulate to Regional Magistrates: YES / NO
Circulate to Magistrates: YES / NO
In the matter between:
SNYMAN, FPM First Applicant
SNYMAN, AA Second Applicant
SNYMAN, WV Third Applicant
and
SPRINGFIT ESTATES (PTY) LTD (In Liquidation) First Respondent
STEENKAMP, JURGENS JOHANNES, N.O . Second Respondent
CAROLUS, PETER N.O . Third Respondent
COMPANIES AND INTELLECTUAL Fourth Respondent
PROPERT Y COMMISSION
ALL KNOWN CREDITORS OF THE FIRST Fifth Respondent
RESPONDENT AS PER ANNEXURE “A”
(FIRSTRAND BANK LTD AND THE LAND
AND AGRICULTURAL DEVELOPMENT BANK
OF SOUTH AFRICA )
Page 2
SNYMAN, JOHANNES HENDRIK Intervening Party
Neutral citation: FPM Snyman and Others v Springfit Estates (Pty) Ltd (In
Liquidation) and Others (2040/2022) ( 18 February 2026)
Coram: Nxumalo J
Heard: 07 February 2025
Delivered : 27 February 2026
Summary: Business rescue – Section 131 of the Companies Act 71
of 2008 – Requirements – Reasonable prospect s of
rescue and/or better return for creditors and shareholders
– Prospect s must be based on reasonable grounds –
None established.
ORDER
1. The application is hereby dismissed with costs.
JUDGMENT
Nxumalo J
INTRODUCTION :
[1] This application , in the main , pertains to the placement of the first
respondent under supervision and for business rescue proceedings to
be commenced under Section 131(1) and (4) of THE COMPANIES
ACT1 (“the Act ”). The papers are somewhat voluminous and the
disputes , many and complex.2 Motion proceedings , unless concerned
with interim relief, are all about the resolution of legal issues based on
common cause facts . Unless the circumstances are special , they
cannot be used to res olve factual issues because they are not
1 71 of 2008.
2 A total of 8 Volumes.
Page 3
designed to determine probabilities. 3 Unfortunately, the Legislature
has deemed it fit to prescribe motion proceedings in matters where an
order is sought for the business rescue of a company. 4
[2] Secondly, the applicants seek the appointment of one Jacques Du Toit
of Du Toit Business Rescue (Pty) Ltd, as an interim business rescue
practitioner of the first respondent as contemplated in Section 131(5)
of the Act , pending ratification of such appointment as contemplated in
Section 147 of the Act; alternatively, a substitute proposed by the
applicants to the Companies and Intellectual Property Commission ,5 in
the event that Mr Du Toit’s appointment is or becomes unsuitable or
impossible for any reason . Thirdly, the applicants seek the costs of
this application to be costs in the business rescue proceedings . The
applicants lastly seek further and/or alternative relief, as the Court
deems meet.
[3] It is common cause that liquidation proceedings had already been
commenced by the FirstRand Bank6 against the first respondent at the
time this application was lodged . It is also so that if liquidation
proceedings have already been commenced by or against the
company at the time an application is made in terms of Section 131(1),
the business rescue application will suspend those liquidation
proceedings until: (a) the Court has adjudicated upon the application;
or (b) the business rescue proceedings end, if the Court makes the
order applied for. 7
BRIEF STATEMENT OF THE LAW :
3 National Director of Public Prosecutions v Zuma (Mbeki and Another Intervening) [2009] 2 All SA 243
(SCA); 2009 (2) SA 277 (SCA) para 26.
4 See Oakdene Square Properties (Pty) Ltd and others v Farm Bothasfontein (Kyalami) (Pty) Ltd and Others ;
Farm Bothasfontein (Kyalami) (Pty) Ltd v Kyalami Events and Exhibitions (Pty) Ltd and Others [2012] 2
All SA 433 (GSJ) para 2.
5 Cited as the fourth respondent herein.
6 Which forms part of the fifth respondent in casu.
5 Cited as the fourth respondent herein.
6 Which forms part of the fifth respondent in casu.
7 Section 131(6) of the Act.
Page 4
[4] Section 131(1) of the Act expressly stipulates that , unless a company
has adopted a resolution contemplated in Section 129, an affected
person may apply to a Court at any time for an order placing the
company under supervision and commencing business rescue
proceedings .
[5] Section 131(4) of the Act, for its own part, empowers this Court, after
considering an application in terms of subsection (1), to:
“(a) make an order placing the company under supervision and
commencing business rescue proceedings, if this Court is satisfied
that-
(i) the company is financially distressed;
(ii) the company has failed to pay over any amount in terms of an
obligation under or in terms of a public regulation, or
contract, with respect to employment -related matters; or
(iii) it is otherwise just and equitable to do so for financial
reasons, and there is a reasonable prospect for rescuing the
company; or
(b) dismissing the application, together with any further necessary and
appropriate order, including an order placing the company under
liquidation. ”
[6] Section 131(5) of the Act, expressly stipulates that if this Court makes
an order in terms of Section 131(4)(a) of the Act, it may make a further
order appointing as interim practitioner , a person who satisfies the
requirements of Section 138, and who has been nominated by the
affected person who applied in terms of Section 131(1) of the Act,
subject to ratification by the holders of a majority of the independent
creditors’ voting interests at the first meeting of creditors, as
contemplated in Section 147 of the Act. 8
8 The said Section regulates the first meeting of creditors; viz:
“147. First meeting of creditors
(1) Within 10 business days after being appointed, the practitioner must convene, and preside over, a first
meeting of creditors, at which-
(a) the practitioner-
(i) must inform the creditors whether the practitioner believes that there is a reasonable
(i) must inform the creditors whether the practitioner believes that there is a reasonable
prospect of rescuing the company; and
(ii) may receive proof of claims by creditors; and
Page 5
[7] Of significance is the fact that in addition to the powers of this Court on
an application contemplated in Section 131 of the Act, this Court may
make an order contemplated in Section 131(4) or (5) of the Act, if
applicable; at any time during the course of any liquidation
proceedings or proceedings to enforce any security against the
company. 9 It is also so that a company that has been placed under
supervision in terms of Section 131 of the Act: (a) may not adopt a
resolution placing itself in liquidation until the business rescue
proceedings have ended as determined in accordance with Section
132(2); and (b) must notify each affected person of the order within
five business days after the date of the order .10
THE PARTIES :
[8] The first applicant in these proceedings is one F rederick Pieter
Mattheus Snyman, a retired farmer, residing in Kimberley . The second
applicant is one Abraham Adriaan Snyman, a pensioner residing in
Jeffreys Bay . The third applicant is one Willem Venter Snyman, a
pensioner, residing in Barkly West . The third applicant is the deponent
to the founding and replying affidavits, against which this application is
predicated.
[9] The first respondent is one Springfit Estates (Pty) Ltd (in liquidation) ,
duly registered in accordance with the company laws of the Republic,
with its registered office situate at 1[...] P[...] R[...] Street, New Park,
Kimberley . The second respondent is one Jurgens Johannes
Steenkamp N.O., an insolvency practitioner in the employ of one J JS
(b) the creditors may determine whether or not a committee of creditors should be appointed and, if
so, may appoint the members of the committee.
(2) The practitioner must give notice of the first meeting of creditors to every creditor of the company whose
name and address is known to, or can reasonably be obtained by, the practitioner, setting out the-
(a) date, time and place of the meeting; and
(b) agenda for the meeting.
(a) date, time and place of the meeting; and
(b) agenda for the meeting.
(3) At any meeting of creditors, other than the meeting contemplated in Section 151, a decision supported by
the holders of a simple majority of the independent creditors’ voting interests voted on a matter, is the
decision of the meeting on that matter.”
9 Section 131(7) of the Act.
10 Section 131(8) of the Act.
Page 6
Administrators (P ty) Ltd, carrying on business at office 3 […], T […]
Floor, T […] P[…] Building, W […] v[…] S[…] Drive, Tyger Valley . The
third respondent is one Peter Carolus N.O., an insolvency practitioner
of MX3 Consultants, carrying on business at T […] Floor, B […] C[…]
Building, Bellville, Cape Town . The fourth respondent is the
Companies and Intellectual Propert y Commission , a statutory body
appointed as the Companies Office for the Republic, in terms of the
Act.
[10] The fifth respondent is ‘All known creditors of the first respondent as
per Annexure “A”’, i.e. the FirstRand Bank (“the Bank”) , and the Land
and Agricultural Development Bank of South Africa (trading as the
Land Bank ). The former is a registered bank and public company,
with a share capital and limited liability, duly incorporated in
accordance with the company and banking laws of the Republic . Its
registered office is situate at F[…] Floor, […] M[…] Place, corner
Fredman Drive and Rivonia Road, Sandton . The latter is a body
corporate capable of suing and being sued in its own name,
established in terms of the laws of the Republic . The Land Bank has
however remained moribund in these proceedings.
[11] The Bank , for its own part, delivered an answering affidavit on 23
March 2023, seeking an order for the application to be dismissed with
costs. The delivery of the said affidavit , out of time , was condoned by
this Court, upon application of the Bank.
[12] The intervening party is one Johannes Hendrik Snyman, who at some
stage resided at De Hoop Farm, Barkly -West, Northern Cape
Province. The intervening party is a lso a director of the fir st
respondent with a 25% sharehold ing therein.
BACKGROUND :
Overview of the salient facts :
Page 7
[13] The first respondent is essentially a property holding company which
apparently owns a number of immovable properties ; to wit: Harrisdale
226 (valued at R20.3 million); Harrisdale 362 (valued at R10.2 million );
Williamstown (valued at R13.9 million); and Sunnydale ( valued at
R24 million). The first respondent is said to indirectly lease these
immovable properties to two of the three operating farming companies,
to wit: Harrisdale Boerdery (Pty) Ltd and Na-Myns Boerdery (Pty) Ltd .
The third operating farming company, which does not lease any of the
first respondent’s farms, is O2 Boerdery (Pty) Ltd . Mortgage bonds
were registered in favour of the Bank and the Land Bank over only two
of the first respondent’s immovable properties ; to wit: Harrisdale and
Sunnydale.
[14] The debt owed by the three above-mentioned operating farming
companies to the Bank was called by the Bank on 01 April 2019 . The
debt owed by the first respondent; the surety and co -principal debtor,
was contemporaneously called-up. Prior to the first respondent ’s
liquidation : Harrisdale Boerdery (Pty) Ltd, owed the Bank an amount of
approximately R1 785 686.28; O2 Boerdery (Pty) Ltd owed
approximately R1 395 450.44; and Na-Myns Boerdery (Pty) Ltd
approximately R2 301 788.69. The total of the foregoing is
approximately R5 482 925.41.
[15] One Mr Japie van Zyl of Japie van Zyl Attorneys ( Mr van Zyl) , at all
material times hereto , was acting for the first respondent . Mr van Zyl,
on behalf of the first respondent, responded to the above-mentioned
call-up letter on 12 April 2019, vide an e-mail, in terms of which he
requested for the matter to be held over in order for a meeting to be
arranged with representatives of the Bank to “advise the Bank of the
processes followed therein” . Further communication with Mr van Zyl
followed, but the debt was not settled, nor any proposal to settle it
received. As the indebtedness of the first respondent was not in
received. As the indebtedness of the first respondent was not in
dispute, the Bank handed it over to its attorneys of record to take
further steps.
Page 8
[16] De Klerk & Van Gen d Incorporated , almost nine months after the debt
was called up, in January 2020, addressed a notice in terms of Section
345 of THE COMPANIES ACT 61 of 1973 (“the 1973 Act ”), to the first
respondent. 11 Similar notices were also addressed to the so-called
farm operating companies . It is so that by 06 March 2020, the first
respondent had not responded to the said notice, nor had it attended
to payment of the Bank’s demand . In the circumstances, the said
attorneys addressed an e -mail on the said date to Mr van Zyl,
attaching a copy of the said notice . Mr van Zyl acknowledged receipt
of same on 11 March 2020 and undertook to revert in due course , he
however did not.
[17] Consequently , a further e -mail was addressed to him on 19 May 2020,
informing him that the Bank will proceed with legal steps, unless a
response was received by the close of business on Friday 22 May
2020. Thereafter, it seems c ertain “without prejudice” correspondence
was exchanged , to no avail, for more than three months. The Bank
thereafter instructed its attorneys to proceed with the liquidation
application, which was issued on 19 October 2020, under case
number 1823/2020 . A provisional order of liquidation was sought and
granted by this Court against the first respondent on 06 November
11 The said Section expressly stipulates as follows;
“345 When a company deemed unable to pay its debts
(1) A company or body corporate shall be deemed to be unable to pay its debts if-
(a) a creditor, by cession or otherwise, to whom the company is indebted in a sum not less than one
hundred rand then due-
(i) has served on the company, by leaving the same at its registered office, a demand
requiring the company to pay the sum so due; or
(ii) in the case of any body corporate not incorporated under this Act, has served such demand
by leaving it at its main office or delivering it to the secretary or some director, manager
by leaving it at its main office or delivering it to the secretary or some director, manager
or principal officer of such body corporate or in such other manner as the Court may
direct, and the company or body corporate has for three weeks thereafter neglected to pay
the sum, or to secure or compound for it to the reasonable satisfaction of the creditor; or
(b) any process issued on a judgment, decree or order of any Court in favour of a creditor of the
company is returned by the sheriff or the messenger with an endorsement that he has not found
sufficient disposable property to satisfy the judgment, decree or order or that any disposable
property found did not upon sale satisfy such process; or
(c) it is proved to the satisfaction of the Court that the company is unable to pay its debts.
(2) In determining for the purpose of subsection (1) whether a company is unable to pay its debts, the Court
shall also take into account the contingent and prospective liabilities of the company.”
Page 9
2020. The second and third respondents were contemporaneously
appointed as joint provisional liquidators.
[18] The initial return date of the provisional liquidation was determined as
11 December 2020 . On the eve of the return date , the first respondent
elected to enter appearance . The first respondent however never
delivered an answering affidavit to resist the said application . This
notwithstanding, o n the said date, the rule nisi was nevertheless
extended to 22 January 2021 . On 15 December 2020, the applicants
launched their first business rescue application under case number
2250/2020 (“the first business rescue application”) . Consequently, o n
22 January 2021, the rule nisi was further extended to 12 February
2021; and thereafter to 26 March 2021 and finally to 06 August 2021.
[19] What can be deduced from the foregoing in sum , is the following .
First, it is not in dispute that the debt in question became due and
payable to the Bank as early as April 2019 . It is also not in dispute
that the first respondent, at all material times hereto , could not pay the
said debt and was therefore deemed commercially insolvent and
consequently liquidated by this Court . Second, it is apparent that none
of the contents of the correspondence that ensued between the parties
is denied . The liquidators at all material times hereto rejected the
offers pertaining to the sale of the first respondent’s property to defray
the debt in question . It is further so that t here are three properties
owned by the first respondent which may be sold to defray its
indebtedness to the Banks .
The dismissal of first business rescue application and the placing of the
first respondent in final liquidation :
[20] The Bank opposed th e first business rescue application and requested
that same be heard together with the final liquidation application . On
06 August 2021, the business rescue and final winding -up application s
were heard simultaneously.
Page 10
[21] In the said counterapplication , the applicants contended that placing
the first respondent in business rescue instead of final liquidation
would maximise its likelihood of continuing on a solvent basis by
selling the three farms, the profit from which t he first respondent would
be able to discharge its liabilities to its creditors , thereby allowing it to
operate on a solvent basis as a property -owning entity .
[22] The Bank, for its own part, opposed that business rescue application
for, inter alia, the following reasons: (a) the essence of the proposed
business rescue plan was not different to the liquidation of the first
respondent and was thus only sought to delay the inevitable; and (b)
the business rescue application would not achieve any of the two
goals contemplated in Section 128(1)(b) of the Act . The Bank also
pointed out that the first respondent has not only repeatedly breached
the terms of the overdraft facilities, but has also failed to provide the
Bank with the relevant annual financial statements to enable it to
review the impugned overdraft facilities .
[23] After hearing the parties, this Court on 06 August 2021, dismissed the
business rescue counter-application and confirmed the 06 November
2020 rule nisi . That order has never been appealed and therefore
remains extant .
[24] Thereafter, o n 06 October 2021, the first meeting of creditors was
convened by the Master of this Court . The second meeting was held
on 28 February 2022 . At the latter meeting , the liquidators arranged
for an auction of two of the first respondent’s farms on 20 October
2022.12 These farms formed the security for the debts owed to the two
Banks. On the said action date, the two farms were auctioned in
amounts sufficient to cover the first respondent’s indebtedness to both
Banks.
12 Harrisdale and Sunnydale farms.
Page 11
THE SECOND BUSINESS RESCUE APPLICATION :
The Applicants’ main case, in sum :
[25] The said sales could , however, not be confirmed since the applicants ,
on 19 October 2022 (i.e . a day before the auction) , issued this
application which was served on the Bank on 24 October 2022 .
Thereafter , both the intervening part y and the fifth respondent i.e. the
Bank in particular, entered the fray.
[26] In this application, t he applicants maintain that although a willing and
able “cash buyer” could not be found for Williamstown since 2018, one
Tidal Winds (Pty) Ltd had , on 14 March 2022, made a formal cash
offer to purchase the said farm for a total amount of R8 million (“the
first offer”) . That this notwithstanding, the liquidators have , for various
“technical reasons ”, not been prepared to finalise th at transaction on
behalf of the first respondent.
[27] The applicants also maintain as follows . That given the fact that the
first respondent is principally a property -owning company, its
immovable assets by far exceed its liabilities and is thus factually
solvent. That t he first respondent is in any event not responsible for
the fact that the trading entities breached their overdraft facilities
provided by the Bank . That the Land Bank is the only other major
creditor of the first respondent . That the first respondent is capable of
being rescued and restructur ing its affairs so as to ensure that its
creditors are paid in full , as there is a willing and able buyer for the
above-mentioned farms.
[28] That it is so even though De Hoop farm does not belong to the first
respondent , since the owner (Hans Kanon Plase ) of the said farm
undertook to pay over the sale proceeds of the said farm to settle
debts within the so -called Snyman group . That a similar arrangement
also pertains to the sale proceeds of the Doornhoek farm owned by
Page 12
Doornhoek Plaas . In addition to the foregoing, they also maintain ed
that they are confident that if the affairs of the other companies in the
“Snyman group” can be restructured in the manner proposed by the m,
same would facilitate the continued existence of the first respondent in
a state of solvency . That the proposed exercise would not only
facilitate the payment of the debt of all the creditors of the first
respondent, but would also yield a far better nett return of capital in
favour of its shareholders than would result from a process of
liquidation.
[29] Significantly, c ontemporaneous to the foregoing, the applicants
averred that they have secured another offer for the purchase of
Williamstown farm, in the amount of R9 million, from one KAL
Boerdery (Pty) Ltd (the second offer) . Significantly also , the
applicants, in paragraphs 27 and 28 of the founding affidavit , averred
that the liabilities of the first respondent in the main is the loan granted
by the Land Bank . That the liability that arose from the deeds of
suretyship executed in favour of the Bank, for the debts of the farming
entities, totalled the sum of approximately R3 .8 million only, as at the
time of the first respondent’s liquidation in 2020 .
[30] According to the applicants, the foregoing is as a result of the farming
entities ’ “alleged breaches” of their financial commitments towards the
Bank, and that the Bank called in the facilities and demanded
immediate payment of the outstanding balances from the first
respondent . As a further result and by virtue of the suretyships, the
first respondent became indebted to the Bank , which ultimately led to
the first respondent’s liquidation , since the said respondent did not
have the capital or cash reserves to settle the debt called by the Bank .
The applicants referred this Court to the liquidation application
instituted under case number 1823/2020, in support of the foregoing .
instituted under case number 1823/2020, in support of the foregoing .
[31] Further, the applicants averred that they have put up the first
respondent’s “draft annual financial statements” for the year which
Page 13
ended on 29 February 2020, to indicate that the first respondent’s
assets exceed its liabilities by a large margin . That the same holds
true in respect of the latest set of the 2022 “draft financials” prepared
by the first respondent’s new auditors . According to the applicants,
the said draft finan cials indicate an equity in the first respondent , to
the tune of R43 .5 million . These draft statements have been attached
to the founding affidavit as FA3.1 and FA3.2.
[32] It is against this backdrop that the applicants maintained that they can
readily demonstrate that a reasonable prospect exists of achieving one
of the two goals contemplated in Section 128(1)(b)(iii) of the Act . That
it is so since the sale of Williamstown to Tidal Winds as part of the
business rescue proceedings, the first respondent would be able to
exist in a state of solvency, having paid -off its creditors in full , and
realising a nett capital balance for its shareholders that can be utilised
towards partly paying off the debt of the other entities in the so -called
Snyman group.
The Intervening Party’s case, in sum :
[33] The intervening party is opposed to the relief sought by the applicant s.
In relevant part sans repetition, he averred that he is also a director of
and 25% shareholder in the first respondent . That there are no
farming operations currently being conducted on the Williamstown
farm, which is registered in the first respondent’s name . Since the first
respondent is utilised only as a property -owning entity and does not
conduct any other business, it has no business to be rescued .
[34] The relationship between himself and the applicants (i.e . his brothers
and remainder of the shareholders and directors of the first
respondent) has broken down to such a level that they only
meaningfully communicate through their respective attorneys . The
intervening party averred further that he and his three brothers are
intervening party averred further that he and his three brothers are
divided into two opposing camps, with him standing alone and the
Page 14
remaining three aligned against him, and that he has been excluded
from decision -making within the “Snyman group”, including in relation
to the affairs of the first respondent . He averred further that numerous
disputes have arisen among the directors, shareholders and members
of the Snyman commercial entities, both prior to and following the
liquidation application, which disputes have given rise to multiple
litigation proceedings . That although the brothers resolved to
unbundle the “Snyman group” in an effort to address these difficulties,
the implementation of the unbundling plan proved unworkable and
culminated in a deadlock; attempts to resolve the impasse were
unsuccessful and instead intensified the existing animosity, leading to
further litigation . On this basis, he maintain ed that the directors and
shareholders, including those of the first respondent, are hopelessly
deadlocked in the management of the entities and that the
shareholders and members are unable to break the deadlock.
[35] The intervening party pointed out that a t all material times hereto, the
applicants were desirous to dispose o f, inter alia, the Williamstown
farm for an amount of R8 million . The said proceeds and proceeds
from the sale of other farms such as De Hoop (R20 million); Farm 167
Barkly West (R12 million) and Trent ham (R4 .5 million) are intended to
be used to settle an estimated debt of R43 060 655.00, incurred by
Doornhoek; Springfit; Hans Kanon Plase (Pty) Ltd ; O2 Boerdery;
Harrisdale and Na -Myns farms . This is evinced from Annexure JS2,
being the applicants ’ attorney’s letter dated 18 October 2022 . That the
offer of R8 million , that the applicants are willing to accept for the
Williamstown farm is less than half of the valuation of the same, regard
being had to Annexure JS3.
[36] Further that, a s a result of the deadlock between the directors and
shareholders of the first respondent, the latter’s business cannot be
shareholders of the first respondent, the latter’s business cannot be
conducted to the advantage of all the shareholders , generally . The
premise on which the application is based is therefore flawed and not
able to be executed or implemented . He aver red that the only
Page 15
pragmatic solution is to proceed with the liquidation of the first
respondent , including the other entities that make up the “Snyman
group”. He denies that the liquidators are prejudicing any of the rights
of the first respondent’s shareholders . That it is so because the
liquidators are attempting to dispose of the Williamstown farm for a
purchase price of R13 million; as evinced in Annexure JS4, attached
to his answering affidavit . Further t hat such a sale would have
resulted not only in the payment of the first respondent’s creditors, but
also that some amount would be available to shareholders to pay their
creditors .
[37] That the foregoing notwithstanding, the applicants are frustrating the
liquidators by interfering with the liquidation process by attempting to
sell Doornhoek and De Hoop farms to settle the first respondent’s
liabilities . The foregoing is evinced in Annexure JS5 and 6 . The
former is a copy of an e -mail from the liquidator transmitted on 16
March 2022 . The latter is also a copy of an email of the liquidator
transmitted to the applicants dated 19 October 2022 . In both emails,
the liquidator pointed out that the liquidators correctly declined to
consent to the sale of the Williamstown farm being made conditional
on the sale of the other immovable properties of the other Snyman
entities. The intervening party also denied that any written lease
agreements were ever concluded between Hans Kanon Boerdery CC
and any of the “property -owning” companies . Alternatively, h e invited
the production of such agreements to be produced by the applicants in
reply to no avail . He also maintained that rental due and payable to
the first respondent remains unpaid, at all material times hereto.
[38] The intervening party also d isputed the applicants ’ recordal of the
various entities debt s and maintained that the first respondent’s
obligations have not been included in the same . He also averred t hat
obligations have not been included in the same . He also averred t hat
the liquidators would be derelict of their duties should they accept the
offer of R8 million, for the Williamstown farm, as the said amount is
less than half of its market value . Further, he took issue with t he
Page 16
proposed business rescue . The argument being that the applicants do
not illustrate or prove how the business rescue of the first respondent
will facilitate the payment of its creditors, unless the assets belonging
to other entities are simultaneously sold . Keeping the first respondent
in liquidation will ensure an impartial and objective payment to the
advantage of creditors , so averred the intervening party .
[39] That h e has filed an application under case number 203 8/2022, in
terms of which he seeks that the resolution of the majority of
shareholders of Hans Kanon Plase (Pty) Ltd , at the meeting of 02
August 2022, pertaining to the sale of De Hoop, be set aside . That
motion was still pending before this Court when pleadings were filed in
casu. He also intend ed to oppose the sale of Doornhoek farm to be
confirmed vide Section 115 of the Act . He therefore denie d that the
only impediment to the sale of the latter farm are the terms of the
liquidators.
[40] The intervening part y also aver red that the proposed interim business
rescue practitioner (“the practitioner”) is clearly not independent and
will not take the interest s of all affected parties into account in the
management of the first respondent . That i t is so since the said
practitioner takes instructions exclusively from the applicants and their
attorney of record . That the applicants intend to sell immovable
properties registered in the names of Doornhoek and Hans Kanon
Plase (Pty) Ltd , far below their market value , to settle the first
respondent’s debts and theirs . Further that t he applicants, despite
being requested to provide information on how the debts of the
different entities would be settled, have failed to do so, at all material
times hereto .
[41] Further that, i f the sales of Doornhoek and De Hoop were to proceed,
he and his son would lose the immovable property from which they
generate income, whi lst the applicants would be debt -free and still
generate income, whi lst the applicants would be debt -free and still
retain the immovable properties they are currently residing and
Page 17
farming on . It is against this backdrop that the intervening party
sought this application to be dismissed with costs.
The Bank’s main case, in su m:
[42] According to the Bank, it initially had resolved not to oppose th is
application in the hope that the business rescue plan foreshadowed by
the applicants would lead to the speedy realisation of the first
respondent’s assets , for it to be paid . It however had changed tact
once the intervening party successfully applied to intervene . It did so
since it was only then that it became apparent that there were various
disputes of fact and legal processes which made the business rescue
plan improbable, if not impossible . It is on these bases that the Bank
belatedly instructed its attorneys of record to prepare answering
papers as soon as possible, which it did . The Bank has requested that
the late filling of its answering affidavit be condoned as doing so would
not be prejudicial to the applicants . This Court agreed and ruled
accordingly.
[43] The Bank , in the main , contended that since the nub of this application
is the contention that if the first respondent sells only one of its three
farms, i.e. Williamstown farm, for a purchase price of R8 million; the
first respondent would be able to continue trading on a solvent basis .
It follows that th e sale of other properties belonging to the other
related companies should be discounted since what is relevant is only
the first respondent’s exclusive assets and liabilities in these
proceedings.
[44] That since the applicant s maintain that the first respondent in the main
only owes the Bank R3.9 million and the Land Bank R2.8 million,
respectively; this application is without merit since any such asset
realisation would in any event be made by the liquidator, as it was
intended with the 20 October 2022 auction . The Bank also averred
that the liquidators justifiably rejected the conditional offer of Tidal
Page 18
Winds as same imposed very onerous obligations on the first
respondent and consequently on the liquidators . That the reasons the
liquidators refused the first offer are neither technical nor nebulous as
alleged by the applicants . That the applicants failed to address the
issues raised by the liquidators during October 2022, shortly before
the auction, but instead provided the liquidators with a second offer,
from one KAL Boerdery (Pty) Ltd (“KALB”) , who was allegedly willing
to provide all the guarant ees as requested by the liquidators in
response to the Tidal Winds offer.
[45] The Bank averred t hat the applicants , in the first business rescue
application , alleged that they had resolved to voluntarily place Hans
Kanon Plase in business rescue . This averment has not been denied
in the applicants’ replying affidavit , which was filed on 08 February
2024.13 This stance is careless of the fact that th e intervening party ,
who at all material times hereto has occupied the De Hoop farm , is
opposed to the sale of the said property , the business rescue or his
eviction from the said farm . That l itigation is pending regarding this
dispute. And the applicants ha ve not fully considered or disclosed the
import of the other legal disputes t hey have with one of the first
respondent ’s shareholders and director, in these proceedings . There
are various disputes of fact and legal processes which make the
business rescue plan implausible or improbable; especially regard
being had to the stance taken by the intervening party.
[46] All things considered, it is the view taken by the Bank that it would
ordinarily follow that the transfer of the said farm cannot take place
soon, if at all . That the applicants’ reliance on the alleged second offer
is misplaced since same also lapsed by effluxion of time . That it is so
since it was subject to the resolutive condition that the prospective
purchaser would have delivered bank guarantees for the purchase
purchaser would have delivered bank guarantees for the purchase
price within 90 days, from the date of acceptance of the offer, failing
which the offer simply lapsed, regard being had to the provisions of
13 cf para 64, p776 and para 22, pp 839-840, Vol 8, Pleadings.
Page 19
clause 5.3 of the offer to purchase same. That t he said bank
guarantees, at all material times hereto were never delivered .
[47] The business rescue proceedings are not meant to enable companies
to liquidate their assets at their own time and pace , so a verred the
Bank. That th e process is temporary and meant to address the
rehabilitation of companies in the short run . That th e examination of
the history relating to the dispute between the shareholders and
directors of the first respondent bears out that this application was
brought solely for the purposes of delay . For instance, despite
demand by the liquidators, no rental from the operating companies has
been received to date . Accordingly, so averred the Bank, t here is
therefore no legitimate reason why there should be any further delays
in the liquidation of the first respondent because in the interim, the
interest continue s to accrue on the debt owing to the Bank.
[48] That th e applicants have not evinced that there will be a better return
for the first respondent’s creditors or shareholders than would result
from the immediate liquidation of the first respondent .14 That it is so
because as a property holding company, in which property has to be
realised to pay creditors, there is no material difference between
business rescue and liquidation . There is accordingly no basis for the
applicants to have launched this application in order to stop the
realisation of the first respondent’s assets because the end results
would be the same.
[49] Further, the Bank averred t hat where a company does not trade and
the application for business rescue envisage s the disposal of its
assets only; business rescue is unlikely to achieve any of its primary
goals because same was not intended to achieve the winding -up of a
company to avoid the consequences of liquidation proceedings . To
the contrary, a liquidator is well placed to deal with such issues in the
the contrary, a liquidator is well placed to deal with such issues in the
interest of all parties as opposed to a business rescue practitioner . A
14 Section 128(1)(b) of the Act.
Page 20
liquidator also has investigative powers by way of inquiry mechanisms
and the ability to set aside impeachable transactions . A business
rescue practitioner has no such powers . The matter has been
dragging on for long and the Bank may need the liquidator to invoke
the relevant provisions of the insolvency and company legislation.
[50] That a liquidator will realise the first respondent’s properties for the
best possible value . Whether by auction or private treaty . There is
therefore no reason to belie ve that a business rescue will achieve a
better return than the immediate realisation of the first respondent’s
assets by the liquidators . It is t he Bank’s view that the condition
precedent that the De Hoop transaction must proceed for the
Williamstown transaction to succeed, appears to be too difficult, if not
impossible , in the short term to fulfil.
[51] The Bank concluded that th is application , in essence , therefore
amounts to an “informal winding -up” which cannot achieve either of
the goals contemplated in Section 128(1)(b) of the Act . That this
application is not bona fide and does not establish that the benefits of
a successful business rescue will be achieved . It is against this
backdrop that the Bank sought this application to be dismissed with
costs in the liquidation.
The Applicants ’ reply, in sum :
[52] In their replying affidavit delivered on 08 February 2024, the applicants
pointed out that it is telling that the Bank initially decided to abide by
the outcome of this application . That clearly , the Bank took th at
stance because it believed that the business rescue plan was viable
and that it would be paid as and when same is put into place . That
unfortunately , the minority shareholder, Mr J H Snyman (the
intervening party) , irresponsibly and out of sheer spite and/or
unreasonably, decided to intervene in these proceedings and to
oppose same.
Page 21
[53] That in the bigger scheme of things , the majority of the Snyman
shareholders seek to secure the continued existence of the three
solvent property -owning companies (i.e . Doornhoek; Hans Kanon and
the first respondent) that own substantial assets that by far exceed
their debts/liabilities , and to thereby preserve their shareholder’s
interests in the substantial value represented in the value of the farms
that were and remain under threat of forced sales.
[54] That these sales in liquidation or execution have largely been averted
by the dismissal of the liquidation application and the business rescue
order pertaining to Doornhoek; and the successful sale and transfer of
De Hoop and Trentham farms to settle the GWK’s debt in full . That
the same result will be achieved in this matter by the sale of only the
Williamstown farm to Tidal Winds, to the benefit of all parties . That the
applicants do not merely seek to achieve an informal winding -up of the
first respondent . To the contrary, they seek to protect its continued
existence and the farms it owns; which will be severely and irreversibly
damaged by the process of liquidation . The applicants contended that
the objectives of business rescue are capable of being achieved and,
in reply maintained that , business res cue will yield a better retu rn for
creditors and shareholders than li quidation.
[55] The applicants relied on paragraph 12 of the Bank’s answering
affidavit and averred that, it is common cause that the Bank is the only
principal creditor of the first respondent in the amount of R5 .48 million .
It was further averred that De Hoop has already been bought and
transferred to Tidal Winds on 29 March 2023, after the Bank delivered
its answering affidavit on 20 March 2023 . Furthermore, the occupiers
of De Hoop have since vacated, and Tidal Winds has taken full
occupation thereof . There is accordingly no legal impediment to the
occupation thereof . There is accordingly no legal impediment to the
sale and transfer of the Williamstown farm, which can be dealt with by
the appointed business rescue practitioner, without the sort of
impediments and difficulties raised by the liquidators.
Page 22
[56] That despite the existence of a viable sale of the middle -valued farm,
which sale will result in the payment of all the first respondent’s debts,
it is ironic that the liquidators saw it fit to rather sell the more valuable
farms on auction , i.e. Harrisdale and Sunnyside . The results were
that the extremely valuable farms were to be obtained at bargain
prices, i.e. the former for R13 million and the latter for R5.3 million,
only.
[57] The sale of these highly valuable farms, valued in excess of R50
million, to pay debts totalling approximately R9 million, will severely
prejudice the shareholders’ value and interest in the first respondent .
This is distinguishable from the scenario where the Williamstown farm
is sold to cater for all creditors’ claims , so continued the applicants’
averment . In reply, the applicants persisted in contending that the
application was brought in good faith and for a proper purpose, that at
least the secondary objective of business rescue is capable of
achievement; that there are reasonable prospects of rescuing the
company; and that it would be just and equitable in the circumstances
to grant the order sought . To the applicants, the business rescue plan
is achievab le and sound .
[58] That regard being had to the foregoing, the “tongue -in-cheek” stance
taken by the Bank that it still has to agree to the sale cannot be
genuine. That it is so since t he Bank is only interested in getting paid ,
which it will from the successful cash sale and transfer of Williamstown
farm to Tidal Winds or any other willing and able buyer . The private
sale of Williamstown will result in achieving the statutory objects of
business rescue . Liquidation , on the other hand , would be far more
prejudicial to the first respondent ’s shareholders . That it is so because
the liquidators intend to sell off the said farms, which are more
valuable and sizeable , for prices far below their market value.
Page 23
[59] Further, that these sales of the higher valued farms, whilst also settling
all creditors’ claims, will result in higher liquidation costs and clear
prejudice to the shareholders of the first respondent . The applicants
consequently deny that there will be no material difference in the
results between business rescue and liquidation proceedings.
[60] To the contrary, Williamstown can and will be sold for a cash price of
R8 million, which is a price much more realistic of its true value , and
which will yield sufficient proceeds in order to pay all the debts of the
first respondent . Such a sale can indeed provide a basis for a
business rescue plan , and for placing the first respondent under
business rescue , the applicants so concluded .
THE ARGUMENTS :
The Applicants’ :
[61] The following was in sum submitted on behalf of the applicants . That
the first respondent, whose only real business is that of a property
holding company that owns substantial assets, can, as a result of new
circumstances, be returned to solvency and creditors paid in full . The
prejudice to be suffered by the shareholders in the liquidation scenario
is substantial and real; to wit: (a) the liquidators intend to proceed with
the sale of Harrisdale and Sunnydale farms at R 13 million and
R5.3 million, respectively , in circumstances where the said properties
have been valued in excess of R50 million . That the said properties
are to be sold at bargain prices to cater for debts totalling a mere
fraction of their value i.e . debts totalling R6 .5 million; only . To the
contrary, the sale of the smaller Williamstown farm, for a consideration
of R8 million, will be sufficient to cater for all the debts.
[62] The applicants further submit ted that, s ince Doornhoek Plase (Pty) Ltd
has been placed in business rescue on 02 February 2024 , by
agreement between the applicants and the intervening party, it puts
Page 24
paid to the latter’s opposition to this application . That, although the
first respondent is under final winding -up, it has been held that there is
no sensible justification for drawing the proverbial line in the sand
between pre and post -final liquidation in circumstances where the
prospects of business rescue exist . The Legislature di d not do so , and
to restrict business rescue to those cases in which a final winding -up
order has not been granted would be inimical to the Act.15
The Intervening Party’s :
[63] The intervening party, for its own part , inter alia, contended as follows .
That the applicants have not appealed the dismissal of the first
business rescue counter -application or the order placing the first
respondent in final liquidation, before launching this second business
rescue application . The onus is on the applicants to show that there
are reasonable prospects of either of the two goals contemplated in
Section 128(1)(b)(iii) of the Act being achieved . The applicants have
failed to do so in accordance with the rules of motion proceedings,
which, generally speaking , require that it must evince same in its
founding papers .
[64] The applicants in their founding papers go no further than to allege
that business rescue would be more beneficial for the creditors and
shareholders , so argued the intervening party . The intervening party
went further and argued that, the applicants merely state that a market
related price for the Williams town farm will be more beneficial than the
forced sale of one or more of the other farms at less than ideal prices .
That the argument of the applicants that a sale by the liquidator would
result in a less than ideal price, which would be prejudicial to the
creditors and shareholders , fell away because the applicants we re
quite happy to accept an offer far below the market value of the said
farm.
15 See Richter v ABSA Bank Ltd 2015 (5) 57 (SCA) para 17.
Page 25
[65] The applicant s’ proposal that the Williamstown farm be sold by the
business rescue practitioner and not the liquidators was labelled by
the intervening party as nothing more than an alternative informal kind
of winding -up of the first respondent . It was pointed out that this would
be outside the liquidation provisions of the Act, which cannot be
sustained, regard being had to the ratio decidendi enunciated in
Oakdene Square Properties (Pty) Ltd and Others v Farm
Bothasfontein (Kyalami) (Pty) Ltd and Others 16 (“Oakdene”). The
applicants are said to have therefore failed to show that business
rescue would result in a better return for shareholders and creditors
than immediate liquidation would.
[66] The intervening party highlighted that the applicants failed to attach to
the replying affidavit any lease agreements from which the purported
rental income would flow to the first respondent, despite the
intervening party inviting them to do so . It was also submitted that, i n
addition to the foregoing, both the second respondent and Enslin s
Auditors’ letter dated 10 November 2022, confirm that no rental
income is flowing to the first respondent . The first respondent is
therefore only a property holding entity with no income flowing from
any rental agreement . The only possible income would require the
immovable properties to be sold , whereafter , the substrate of the first
respondent would no longer exist . Thereafter, the continued existence
of the first respondent on a solvent basis would be impossible.
[67] That w hilst all might be well if the Williamstown farm is sold , finding a
buyer for same in the open market has proven unsuccessful on three
occasions , to date . First, during the first business rescue application .
Second and third being the Tidal Winds and KALB offers, both of
which expired by effluxion of time . The first respondent , therefore ,
remains a property holding entity, with no rental income and no
remains a property holding entity, with no rental income and no
prospective buyer for the Williamstown farm . Which farm the
applicants contend ed will result in it continuing in existence on a
16 2013 (4) SA 539 (SCA).
Page 26
solvent basis; or result in a better return for its creditors or
shareholders than would result from its immediate liquidation.
[68] Further, the intervening party submitted that, r egard being had to two
scenarios apparent from the applicants’ founding affidavit, the
applicants have dithered between same. On one hand, the applicants
are saying that only the sale of Williamstown is required to achieve the
objective contemplated in Section 128(1)(b)(iii) of the Act . On the
other hand, the sale of two other properties (De Hoop and Doornhoek)
belonging to two entirely different and separate entities is said to be
required. The foregoing begs the question, which is it . The
intervening party is adamant that the sale of two other properties and
the Williamstown farm in this application for business rescue is
stillborn from the outset . That the true situation is that the directors
and shareholders are deadlocked and embroiled in bitter litigation with
no end in sight . Nonetheless, he proceed ed to submit that, i f only the
sale of the Williamstown farm is required, the applicants must at least
show that they have a prospective buyer and a selling price that would
benefit the creditors and the shareholders . In truth , they have neither,
so argued the intervening party .
[69] From the foregoing , the applicants have failed to lay a factual
foundation for a reasonable prospect that placing the first respondent
under business rescue would achieve either of the two objectives set
out in the Act , so argued the intervening party . It is against this
backdrop that the intervening party prayed that the application should
be dismissed with costs.
The Bank’s :
[70] The Bank, for its own part, inter alia, submitted as follows . It is
common cause that the final liquidation of the first respondent came
about as a direct result of the “operating companies’” default to repay
their loan repayments to the Bank, for which the first respondent stood
Page 27
as a surety, approximately six years ago . It is also common cause
that the so -called operating companies at all material times hereto
remain indebted to it as follows: Harrisdale Boerdery - R1 785 686.28;
O2 Boerdery- R1 395 450.44; and Na -Myns Boerdery - R2 301 788.69 .
It is so that on 19 October 2020, some 19 months after the debts were
called up, the Bank instituted liquidation proceedings against the first
respondent, as surety of the said debts .
[71] It follows that the first respondent, being the surety, remains liable to
the Bank in the aforesaid amounts, plus interest which is accruing on a
monthly basis at prime plus 3%, as from 16 March 2023 . The Bank
therefore decried the fact that after the lapse of 6 years, liquidation
proceedings which commenced more than four years ago are still in
limbo.
[72] The Bank submitted that t he chronology of the events evinces that on
06 November 2020, a provisional liquidation order was granted and
the return day was extended on several occasions . The applicants
thereafter lodged the first business rescue application which was
heard with the final liquidation application on 06 August 2021 . The
former was dismissed and the latter confirmed . There was no appeal
against these orders.
[73] Thereafter, the liquidators convened an auction for the two Farms
belonging to the first respondent (Harrisdale an d Sunnydale) , which it
has put up as security as surety for the debt in question .
Consequently, the Bank and the Land Bank are secured creditors of
the first respondent . It is the Bank ’s contention that the proceeds from
the said auction would have been sufficient to cover the first
respondent’s indebtedness to both banks as well as all other
concurrent creditors . The remaining property, W illiamstown farm, over
which neither bank held any security, could accordingly have been
distributed to the first respondent’s shareholders along with its
distributed to the first respondent’s shareholders along with its
remaining funds, thereby effecting an orderly distribution of its assets
Page 28
to creditors and shareholders . The foregoing notwithstanding, on 19
October 2022, a day before the auction, the applicants lodged a
second business rescue application . As a result, the auction sales
could not be confirmed by the li quidators. Furthermore, some other
interlocutory applications were lodged and adjudicated in the
intervening period , which further contributed to the delay in the
liquidation of the first respondent .
[74] The Bank pointed out that i n paragraph 16 of the founding affidavit
delivered in the present application , the applicants averred that th e
first business rescue application was predicated against the fact that
the sale of the three farms would have discharged the first
respondent’s liabilities and enabled it to carry on business on a solvent
basis. The Bank submitted that, t his contention was rejected there
and then by the Court in the said application .
[75] The Bank submitted that t he applicants have subsequently sought to
bolster the ir case and overcome the foregoing hurdle by contending as
follows: That w hilst the above -mentioned scenario remained largely
unchanged , the re is now in this application , a “cash buyer” for some
other farms belonging to other entities in the so -called Snyman group ,
and it is only the liquidator who is standing in the way of the said
properties being realised and the proceeds being used to cover all the
debts in question . That the liquidators have quite sensibly refused to
agree to the onerous conditions contained in the impugned offer,
which in any event had expired on 18 March 2022 at 14h00 , which
should be the end of the matter.
[76] The Bank contended that , if regard is had to the documents attached
to the founding affidavit, it appears that there is a complete inability on
the part of the first respondent to generate any rental income from its
properties . For an example, t he financial statements of the first
properties . For an example, t he financial statements of the first
respondent relied upon by the applicants for the six months ending
31 August 2022, reflect a rental income for the three farms belonging
Page 29
to it of a mere R320 000.00. This translates to approximately
R26 000.00, per month only . It is however evident that the first
respondent never received any of the above-mentioned amounts since
Hans Kanon Boerdery CC owed an amount of R3 804 767.00, to the
first respondent by the end of August 2022 . This amount increased to
R4 105 670.00, plus interest by the end of August 2022 .
[77] To allow the head -lessee to incur an ever -increasing debt on a loan
account, which it is completely unable to pay to the first respondent , is
clearly not commercially viable . In the circumstances, it must be
accepted that none of these companies are commercially viable or
have any asset s of substantial value . It also follows that the property -
owning companies, being intrinsically linked to the so-called operating
companies , are similarly circumstanced financially . It is so since it is
clear that the operating companies cannot pay their respective debts
to the Bank and /or their rentals to Hans Kanon Boerdery CC, the latter
who is acting as the so -called head -lessee in terms of the alleged
written or verbal leases concluded with each of the so-called property -
owning companies. 17
[78] The Bank submitted that, from the foregoing, it follows that the
applicants ’ failure to deal with the financial position of each of the so-
called operating compan ies, is a failure to deal with the financial
position of Hans Kanon Boerdery CC . This is especially problematic
for the applicants’ case given that Hans Kanon is ultimately
responsible to pay rental to the first respondent, for the latter to trade
as a viable going concern , if one or two of its three properties are sold .
It is so since the rentals, if any, that are paid to Hans Kanon Boerdery
CC, have not been disclosed . The question is therefore whether the
first respondent can operate as a commercially viable going concern if
one or two of its three properties are sold.
one or two of its three properties are sold.
17 The second respondent has confirmed that rental income owed to the first respondent has never been paid to
the first or second respondent (intervening party’s answering affidavit, p 519, para 25).
Page 30
[79] The applicants ’ submission that although the De Hoop farm does not
belong to the first respondent, but to Hans Kanon Plase; the latter will
pay over the sale proceeds to settle debts within the so -called Snyman
group, was also questioned . So was the submission that t his is also
the case with the Doornhoek farm . In this regard, t he Bank submitted
that the De Hoop farm has , however, already been sold for R12
million, without the Bank being paid . What remains is the tran sfer of
Doornfontein (probably meant Doornhoek farm), in respect of which an
offer of R20 million , was allegedly received by the prac titioner more
than a year ago . To date , however, nothing has come of this . That it
is evident from the foregoing that the properties of the so -called
conglomerate are steadily being sold -off, in a piecemeal fashion,
without revealing how the proceeds were being utilised.
[80] The Bank has also impugned the so -called cash offers by Tidal Winds
and KALB, which this application is mainly predicated against . The
Bank, in the main , contended that both offers have expired . The
former on 18 March 2022 and the latter on 05 November 2022 . That it
is therefore impossible for the applicants to place any reliance on
either of the said offers in this application . That the purchase of De
Hoop by Tidal Winds and the latter’s alleged offer to purchase
Doornhoek more than a year ago are still shrouded in mystery . Also,
to the extent that no confirmatory affidavit with regard to Tindal Winds
has been attached in these proceedings, the applicants ’ allegations
regarding the said company are therefore inadmissible hearsay, with
no evidential value .
[81] In any event, Annexure FA5 does not constitute an “out -and-out” offer
to purchase the Williamstown farm , so argued the Bank . That it is so
for the following reasons . Firstly, clause 3.5 thereof expressly
stipulates that the offer and the so-called De Hoop agreement are
stipulates that the offer and the so-called De Hoop agreement are
linked to each other such that the former cannot proceed unless the
latter does . Secondly, the impugned offer stipulated that the liquidator
had to comply with various onerous conditions, including that the
Page 31
liquidator shall : (a) accept the responsibility to settle all liabilities;
direct or indi rect; including contingent and prospective liabilities that
may arise prior to date of registration; (b) provide an unconditional
indemnity in respect of the foregoing; (c) be responsible for all costs
and expenses of the farming enterprise on the property up until the
date of registration; and (d) follow acceptable farming practices during
this time.
[82] Whilst the applicants deny that some of these farms would be sold
below their market value, despite having been in the market since
2016. The applicants have revealed that an online auction was also
held on 18 June 2018, for the purchase of some of the farms , but the
offers were too low and therefore not acceptable . That, given the fact
that the applicants were unable to sell the farms since 2016 or to
accept the offers received at the said online auction, they remain
unwilling to accept that the true market values of the farms are much
lower than their unrealistic expectations.
[83] The Bank submitted t hat the foregoing facts render the applicants ’
allegations of the first respondent being rescued even more
implausible . It is more so i f it is proposed that the assets of the first
respondent be sold and the proceeds distributed amongst its creditors
and shareholders . The reasoning being that, there would no longer be
a going concern which is commercially viable .
[84] That if regard is had to , inter alia, the breakdown of trust between the
directors , the applicants have failed to show that there is a reasonable
prospect that the first respondent could continue to trade as a
commercially viable entity . In the premise, what the applicants are
seeking is clearly an alternative, informal kind of winding -up of the first
respondent by a practitioner, outside the liquidation provisions of the
Act. That, that is not what business rescue proceedings are intended
Act. That, that is not what business rescue proceedings are intended
for. If regard is had to the law laid down by the Supreme Court of
Page 32
Appeal (“the SCA ”), the applicants’ contentions in this regard do not
constitute a valid basis for the relief sought.
DETERMINATION :
[85] It follows from the foregoing that the issues for determination in these
proceedings are:
85.1. Whether the applicants were entitled to lodge this second
business rescue application, despite the fact that they have not
appealed the dismissal of the first business rescue application
and confirmation of the liquidation order;
85.2. Whether the foreshadowed plan to rescue the first respondent,
if approved, would restructure its affairs; business property;
debt and other liabilities ; and equity:
85.2.1. in a manner that maximises its likelihood of
continuing in existence on a solvent basis; or
85.2.2. result in a better return for the company’s creditors or
shareholders than would result from the immediate
liquidation of the first respondent .
[86] I deal first with the first issue for determination . It can be gathered
from the founding papers that the most pertinent distinction between
the first business rescue application and the present , in the main , is
the intended sale of Williamstown to one Tidal Winds and/or KALB .
With regard to the former, the applicants allege d that on 14 March
2022, the said company offered to purchase the said farm for R8
million, and that the same company is not only “extremely desirous” to
continue with the said sale, but also with the purchase of De Hoop and
Doornhoek farms . That although the De Hoop farm does not belong to
the first respondent, the owner thereof (i.e . Hans Kanon Plase) will
pay over the sale proceeds of its farm to settle the debts within the so -
Page 33
called Snyman group, which includes the first respondent . Further
that, the same applies to the proceeds from the sale of Doornhoek
farm.
[87] With regard to KALB, the applicants allege that they secured an offer
from the said company for the sale of the same Williamstown farm for
an amount of R9 million. That the said company is willing to provide
all guarantees, as requested by the liquidators in the previous offer to
purchase.
[88] It is clear from the foregoing that the foregoing offers, if valid, would
amount to changed circumstances of the first respondent . In the
premise, this Court finds that the applicants were entitled to lodge this
second business rescue application, despite the fact that they have
not appealed the dismissal of the first business rescue application and
confirmation of the liquidation order. 18 I proceed to deal with the
second issue for determination , i.e., the merits of the second business
rescue application.
[89] It is trite that the purpose of the Act is , inter alia, to: provide for the
efficient rescue and recovery of financially distressed companies, in a
manner that balances the rights and interests of all relevant
stakeholders. 19 Section 128(1)(b) of the Act, for its own part, defines
the expression “business rescue” as proceedings to facilitate the
rehabilitation of a company that is financially distressed by providing
for:-
“(i) the temporary supervision of the company , and of the management of
its affairs, business and property;
(ii) a temporary moratorium on the rights of claimants against the
company or in respect of property in its possession; and
(iii) the development and implementation, if approved , of a plan to rescue
the company by restructuring its affairs, business , property, debt and
18 Richter v ABSA Bank Ltd 2015 (5) SA 57 (SCA) paras 15-17.
19 Section 7(k) of the Act.
Page 34
other liabilities , and equity in a manner that maximises the likelihood
of the company continuing in existence on a solvent basis or, if it is
not possible for the company to so continue in existence , results in a
better return for the company’s creditors or shareholders than would
result from the immediate liquidation of the company. ”
[90] It is so that the interest s of all the shareholders and their support for
business rescue must be considered . It is also so that business
rescues cannot only be in the interests of some shareholders . Thus,
where our Courts are required to weigh up the competing interests of
the impugned company and its creditors, the interests of the creditors
must prevail. 20
[91] In casu, it is common cause that the first respondent is currently
indebted to the Bank in the amount of approximately R5 482 925.41,
made up as alluded to above . That much is “noted” by the applicants
in paragraph 17 of the replying affidavit, for the purposes of the
present proceedings. 21 It is therefore settled that the first respondent
has failed to pay the said amount, in terms of the obligations under
various terms of the surety contracts, as contemplated in Section
131(4)(a)(ii) of the Act.
[92] The only remaining question is therefore whether it is just and
equitable for financial reasons to grant an order placing the first
respondent on business rescue, and whether there are reasonable
prospects for rescuing the first respondent; regard being had to the
facts and circumstances of this matter .
[93] In sum, according to the applicants, this business rescue application is
predicated against the fact that a cash buyer has made an offer for the
purchase of the three farms. That the said sales would discharge the
first respondent’s liabilities and allow it to carry on business on a
solvent basis thereafter . Further that, w hilst the position remained
largely unchanged, the liquidators are steadfastly standing in the way
largely unchanged, the liquidators are steadfastly standing in the way
20 Swart v Beagles Run Investments 25 (Pty) Ltd 2011 (5) SA 422 (GNP) para 41.
21 P838, RA, Vol 8.
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of the properties being realised , and the proceeds being used to cover
all of the first respondent’s outstanding debts.
[94] The applicants , in sum , contended that the first and most pertinent
aspect of the intended business rescue plan , in the main , concerns the
sale of Williamstown to Tidal Winds . They maintain ed that, in this
regard, the liquidators have been “stumped” by the procedures and
impracticalities of the process of liquidation . Whilst the applicants also
contended that Tidal Winds made a cash offer to purchase
Williamstown farm on 14 March 2022 , “coupled” with “the De Hoop
transaction” . It is , however, evident from a cursory glance at the said
offer that to date, it remains unsigned and therefore would have
expired on Friday 18 March 2022, regard being had to clause 3.4
thereof. The KAL B offer, for its own part , expired on Friday , 05
November 2022, without being accepted by the liquidators.
[95] It follows , from the foregoing that , the lapse of the abovementioned
offers puts the first respondent back to where it was when this Court
granted a final order of liquidation on 06 August 2021 . Significantly
also is the following . The financial statements of the first respondent
for the year ended 29 February 2020 have not been signed by the
intervening party . The applicants have also only put up draft financial
statements for the six months ending 31 August 2022 .
[96] It is trite that financial statements are designed to provide reasonable,
but not absolute assurance as to the state of a company’s financial
position. Further, such statements are meant to adequately
safeguard, verify and maintain accountability of assets , and prevent
and detect misstatements and loss . Financial statements of
companies are therefore vitally important to everyone with interests in
those companies . The Act compels companies to prepare annual
financial statements within six months after the end of each financial
Page 36
year.22 Regard being had to the facts and circumstances of this case ,
this Court is of the view that , financial statements would have served
as a cogent proof of the assets of the respondent , its debts and
expenditure . No such evidence serves before this Court .
[97] Seminally, i n Oakdene, it has been held as follows:
“… As a starting point, it is generally accepted that it is a lesser requirement
than the ‘reasonable probability’ which was the yardstick for placing a
company under judicial management in terms of s 427(1) of the 1973
Companies Act (see e.g. Southern Palace Investments 265 (Pty) Ltd v
Midnight Storm Investments 386 Ltd 2012 (2) SA 423 (WCC) para 21) . On
the other hand, I believe it requires more than a mere prima facie case or an
arguable possibility . Of even greater significance, I think, is that it must be a
reasonable prospect – with the emphasis on ‘reasonable’ – which means that
it must be a prospect based on reasonable grounds . A mere speculative
suggestion is not enough . Moreover, because it is the applicant who seeks to
satisfy the Court of the prospect, it must establish these reasonable grounds
in accordance with the rules of motion proceedings which, generally
speaking, require that it must do so in its founding papers.” 23
[98] Undoubtedly, in order to succeed in an application for business
rescue, the applicants ought to have placed before this Court a factual
foundation for the existence of a reasonable prospect that the desired
object can be achieved . The applicants’ averments are vague and
merely speculative . Vague averments and mere speculative
suggestions are not sufficient to obtain the order sought. 24
[99] Over and above the foregoing is the fact that in casu, the intervening
party and the Bank have strenuously opposed this application . The
grounds are , inter alia, in fact and law meritorious . It is so for , inter
alia, the following reasons . Regard being had to the facts and
alia, the following reasons . Regard being had to the facts and
circumstances of this case ; business rescue is not appropriate since
there is no trading business to be rescued . It was submitted that , this
is because the first respondent only owns immovable property and
does not trade beyond its non -existent rental income from the so -
22 Section 30 of the Act.
23 Supra fn 16 para 29.
24 Propspec Investments (Pty) Ltd v Pacific Coast Investments 97 Ltd and Another 2013 (1) SA 542 (FB)
para 11.
Page 37
called trading/operating companies . So much is said to have been
conceded by the applicants in paragraph 24 of the founding affidavit. 25
Further, it was averred that the second respondent confirmed that
rental income owed to the first respondent has never been paid to the
first or second respondent. 26 A letter from Enslin s Auditors dated 10
November 2022, also confirms that no rental income is flowing to the
first respondent. 27
[100] In Knipe v Kameelhoek and Others ,28 the Free State High Court said
it well that business rescue is not appropriate if there is no trading
business to be rescued, i.e . when a company does not trade, has no
employees, and only owns immovable property. 29
[101] Moreover, in casu, it is evident from the papers filed that there is
infighting between the majority and minority shareholders . It has also
been well said that business rescue is not even available to a solvent
company, in liquidation on the just and equitable ground , due to
infighting between shareholders. 30
[102] Finally, w ithout proof of rental income for the first respondent , it is
difficult to understand how the applicants cannot be said to attract the
SCA’s remarks in Oakdene 31:
“My problem with the proposal that the business rescue practitioner, rather
than the liquidator, should sell the property as a whole, is that it offers no
more than an alternative, informal kind of winding up of the company,
outside the liquidation provisions of the 1973 Companies Act which had,
incidentally, been preserved, for the time being, by item 9 of sch 5 of the 2008
Act. I do not believe, however, that this could have been the intention of
creating business rescue as an institution . For instance, the mere savings on
the costs of the winding up process in accordance with the existing
liquidation provisions could hardly justify the separate institution of business
25 p 14, FA, Vol 1.
26 See the Intervening party’s answering affidavit, p 519, Vol 5, para 25.
26 See the Intervening party’s answering affidavit, p 519, Vol 5, para 25.
27 Ibid para 26.2.
28 (2120/2016) [2017] ZAFSHC 116 (22 June 2017).
29 Ibid para 31.
30 Ibid paras 26-29; see also Knipe v Kameelhoek (Pty) Ltd and Others (2120/2016) [2016] ZAFSHC 193 (10
November 2016) paras 17-18.
31 Supra fn 16 paras 33-34.
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rescue. A fortiori, I do not believe that business rescue was intended to
achieve a winding up of a company to avoid the consequences of liquidation
proceedings, which is what the appellants apparently seek to achieve.
In any event, I believe that, even on its own terms, the appellants’ proposal
consisting of not more than an alternative winding -up, cannot be sustained.”
[103] In light of the discussion above in its entirety , and the authorities cited
therein, i t follows that this application must fail.
ORDER:
[104] In the premise, the following order issues:
THE APPLICATION IS HEREBY DISMISSED WITH COSTS.
____________________
APS NXUMALO
JUDGE OF THE HIGH COURT
NORTHERN CAPE DIVISION
Appearances :
For Applicant s: ADV AM HEYSTEK SC
Instructed by: Japie Van Zyl Attorneys
Potchefstroom
c/o Van De Wall Inc.
Kimberley
For Fifth Respondent : ADV RB ENGELA
Instructed by: De Klerk and Van Gend Inc.
Cape Town
c/o VDH Law
Kimberle y
For Intervening Party: ADV J HARMSE
Instructed by: PGMO Attorneys Inc.
Kimberley