SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this
document in compliance with the law and SAFLII Policy
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Reportable/Not Reportable
Case no: 8249/2024
In the matter between:
ANDRE CARL NEETHLING APPLICANT
and
LOUIS GROUP (SA) (PTY) LTD
(In Business Rescue)
Registration Number: 1999/017615/07)
FIRST RESPONDENT
STUART NICOLAAS ROBINSON N.O.
(in his capacity as the business rescue practitioner of
Louis Group (SA) (Pty) Ltd)
SECOND RESPONDENT
STUART NICOLAAS ROBINSON THIRD RESPONDENT
THE COMPANIES & INTELLECTUAL
PROPERTY COMMISSION
FOURTH RESPONDENT
DOLE SOUTH AFRICA (PTY) LTD
(Registration Number: 1997/020817/07)
FIFTH RESPONDENT
THOMAS CHRISTOPHER VAN ZYL N.O.
(in his capacity as co-trustee of the sequestrated Estate
SIXTH RESPONDENT
of Mr Alan Louis (identity number: 6[...])
CORNELIA MARIA CLOETE N.O.
(in her capacity as co-trustee of the sequestrated Estate
of Mr Alan Louis (identity number: 6[...])
SEVENTH RESPONDENT
IN THE LOOP PROPERTY (PTY) LTD
(Registration Number: 2008/006052/07)
EIGHTH RESPONDENT
ROSEVEAN INVESTMENTS 0048 (PTY) LTD
(Registration Number: 2003/017181/07)
NINTH RESPONDENT
TAHLULA 002 (PTY) LTD
(Registration Number: 2006/038915/07)
TENTH RESPONDENT
UKOSOLA TRADING & INVESTMENTS (PTY)
LTD (Registration Number: 2008/023237/07)
ELEVENTH RESPONDENT
DEON VAN SCHALKWYK N.O.
(in his capacity as trustee of the LGCF Trust)
TWELFTH RESPONDENT
LG RESOLUTION LTD THIRTEENTH RESPONDENT
THE SOUTH AFRICAN REVENUE SERVICES FOURTEENTH RESPONDENT
THE AFFECTED PERSONS OF LOUIS GROUP
(SA) (PTY) LTD (in Business Rescue)
FIFTEENTH AND FURTHER
RESPONDENTS
Neutral citation: Neethling v Louis Group (SA) (Pty) Ltd (in business rescue) and
Others (Case No. 8249/2024) [2026] ZAWCHC (18 May 2026)
Coram: SALLER AJ
Heard: 17 February 2026
Judgment: 18 May 2026
ORDER
1. The fifth to fifteenth respondents are joined to the proceedings, with the
costs of the joinder application being costs in the cause.
2. The application for striking out is dismissed, with each party to pay its own
costs.
3. The application to set aside the votes by creditors on 5 April 2024 rejecting
the business rescue plan is dismissed, with costs on Scale C.
4. The business rescue proceedings which commenced by way of resolution
dated 17 May 2023, filed on 18 May 2023, are converted into liquidation
proceedings, and the first respondent, Louis Group (SA) (Pty) Ltd, is
hereby placed under provisional liquidation in the hands of the Master of
the High Court.
5. A rule nisi is issued calling upon all interested parties to show cause, if any,
on 20 July 2026, as to why the following order should not be made:
a. That Louis Group (SA) (Pty) Ltd be placed in final liquidation; and
b. That the costs of the main application be costs in the final
liquidation in the event of no opposition.
6. Service of the Order is to be effected:-
a. By one publication in each of the Cape Times and Die Burger
newspapers;
b. By service on the South African Revenue Services at 2 […] H[…],
S[…] Avenue, Cape Town; and
c. By service on Louis Group (SA) (Pty) Ltd at its registered address
at N1 House, […] L[…] R[…] Street, Goodwood, Western Cape.
d. By service on the employees of the First Respondent if any; and
e. By service on all registered trade unions, if any.
JUDGMENT
Saller AJ
[1] This matter concerns two substantive applications.
[2] In what I will refer to as the main application, since it was filed first, the
applicant Mr Neethling asks the court to set aside the resolution dated 17 May
2023, which was filed on 18 May 2023 (‘the resolution’), whereby the board of
directors of the first respondent, the Louis Group (SA) (Pty) Ltd (‘LGSA’),
resolved to place LGSA in business rescue, and to place LGSA in provisional
liquidation as provided by the Companies Act, 71 of 2008 (‘the Companies
Act’).
[3] In the alternative, the applicant asks for the removal and replacement of the
current business rescue practitioner nominated in the resolution and appointed
on 1 June 2023, Mr Robinson, with a practitioner nominated by the applicant.
[4] The applicant is one of the independent creditors of LGSA, with a recognised
claim against LGSA of R24 million. Independent creditors make up 24% of
LGSA’s creditors.
[5] LGSA is the first respondent in the main application. Mr Robinson is the
second respondent in his capacity as business rescue practitioner, and also the
third respondent in his personal capacity. The first to third respondents oppose
the main application. The fourth respondent is the Companies and Intellectual
Property Commission (‘CIPC’) established by the Companies Act. The CIPC
does not take part in the proceedings.
[6] The first and second respondents have also brought a counter-application for an
order declaring as inappropriate the rejection by LGSA’s independent creditors
of the second respondent’s proposed business rescue plan (‘the proposed plan’)
on 5 April 2024, and setting that vote aside under section 153(7) of the
Companies Act. The affidavit in support of the counter -application is deposed
to by Mr Robinson, and I refer to the first and second respondents collectively
as the second respondent unless it is necessary to distinguish them as will
appear from the context.
[7] The applicant opposes the counter-application.
[8] The parties are in agreement that the outcome of both substantive applications
hinges on the success of the counter -application which must consequently be
determined first. If it fails, they agree, the main application should succeed.
[9] There are also two interlocutory applications. The second respondent applies
for the joinder of the fifth to further respondents, who are other creditors and
affected persons. The joinder application is not opposed.
[10] The second respondent also asks to have portions of the applicant’s answering
affidavit in the counter-application struck out, on the grounds that such portions
are scandalous, and vexatious. The striking out application is opposed. In the
counter-application’s reply, the second respondent asks that if such portions are
not struck out, they ought to be disregarded.
[11] I deal with the substantive applications first.
THE LEGAL FRAMEWORK: PART A OF CHAPTER 6 OF THE
COMPANIES ACT
[12] The relevant statutory provisions form part of Part A of Chapter 6 of the
Companies Act, which provides for the business rescue of companies in
financial distress and compromise with creditors. Their aim is to provide for
the efficient rescue and recovery of financially distressed companies, in a
manner that balances the rights and interests of all stakeholders (see Diener NO
manner that balances the rights and interests of all stakeholders (see Diener NO
v Minister of Justice and Correctional Services and Others [2018] ZACC 48;
2019 (4) SA 374 (CC) para 38).
[13] Section 132(1) of the Companies Act provides for the commencement of
business rescue in one of two ways. Under section 129 of the Companies Act,
the company’s board may adopt and file a resolution to that effect, thereby
initiating the company’s business rescue. Or, under section 131, a court may
make an order to that effect, either on application by an affected person or
during the course of liquidation proceedings.
[14] Common to both routes into business rescue is that the company must be
financially distressed, and that there must be a reasonable prospect of rescuing
the company.
[15] What is meant by rescuing the company is defined in section 128(1)(h), read
with subsection (1)(b)(iii), to mean “restructuring [the company’s] affairs,
business, property, debt and other liabilities, and equity in a manner that
maximises the likelihood of the company continuing in existence on a solvent
basis or, if it is not possible for the company to so continue in existence, results
in a better return for the company’s creditors or shareholders than would result
from the immediate liquidation of the company.”
[16] Under section 132(2) of the Companies Act, business rescue ends in one of
three ways. A court may set aside the board’s resolution which initiated the
business rescue or convert these proceedings to liquidation proceedings. The
business rescue practitioner may file a notice of termination with the CIPC.
Third, business rescue ends when a business rescue plan has been, either,
adopted and substantially implemented, or proposed and rejected and no steps
have been taken to extend the proceedings.
[17] Under section 152(2), a business rescue plan that is proposed will be approved
only if it was supported by the holders of more than 75% of the creditors’
voting interests that were voted, and the votes in support of the proposed plan
include at least 50% of the independent creditors’ voting interests. The present
include at least 50% of the independent creditors’ voting interests. The present
matter concerns the latter requirement. Here, all of the independent creditors
who voted on the proposed plan, rejected it.
[18] The manner in which a business rescue plan is compiled and proposed
(section 150), considered at a meeting of creditors and other persons holding a
--
voting interest in the company under business rescue (sections 151 and 152(1)),
and either approved and implemented (sections 152(2), (4) -(8)) or rejected
(section 152(3)) are comprehensively dealt with in the legislation.
[19] So, too, are the consequences of a rejection of a proposed business rescue plan.
Section 153 of the Companies Act is headed “Failure to adopt business rescue
plan”. That section sets out in detail the processes to be followed once a
business rescue plan has been rejected as contemplated in section 152(3).
[20] At that point, the practitioner may either seek approval to publish a revised
business rescue plan (section 153(1)(a)(i)) or advise the meeting which has
rejected the business rescue plan that the company will apply to court to set
aside the result of the vote “on the grounds that it was inappropriate”. (If the
practitioner does not make such an election, affected persons have further
remedies under the section that are not presently relevant.)
[21] If the practitioner has informed the meeting that the company intends making
application to have the rejecting vote set aside, the practitioner must adjourn
the meeting for five days, or until a court has disposed of the application
(section 153(2)(b)).
[22] If the practitioner has gained approval for the publication of a revised plan, this
must be published within ten business days (section 153(3)(a)), and that plan
must be dealt with afresh in accordance with the statutory provisions.
[23] Most significant for present purposes is section 153(7). That section empowers
the court to order that the vote rejecting the business rescue plan be set aside “if
the court is satisfied that it is reasonable and just to do so” having regard to the
interests represented by the persons who rejected the plan (section 153(7)(a)),
the provision made in the plan with respect to those interest (section 153(7)(b)),
and “a fair and reasonable estimate of the return to that person, or those
and “a fair and reasonable estimate of the return to that person, or those
persons, if the company were to be liquidated.” (section 153(7)(c)).
[24] The SCA has considered the proper interpretation of section 153(7), read with
section 153(1)(a)(ii), on a number of occasions. In FirstRand Bank v KJ Foods
CC 2017 (5) SA 40 (SCA) at paras 75 to 80, the majority developed what has
since become the settled test. The majority proceeded from the position that a
proper interpretation of these sections takes place with reference to the objects
of the Companies Act including, in section 7(k), enabling the efficient rescue
and recovery of financially distressed companies in a manner that balances the
rights and interests of all stakeholders. The SCA then endorsed the cautionary
note as it was expressed by Gorven J in DH Brothers Industries (Pty) Ltd v
Gribnitz NO & Others 2014 (1) SA 103 (KZP) at para 10, namely that the
provisions of the chapter were aimed at the rescue of viable companies only,
not all companies placed under business rescue.
[25] On the specific interpretation of section 153(1)(a)(ii), the majority in FirstRand
accepted that the word “unsuitable” in that section bore the ordinary dictionary
meaning of “not suitable or proper in the circumstances”. The SCA rejected a
two-stage approach which would have focused, as a first step, on the subjective
opinions of creditors.
[26] Instead, 153(1)(a)(ii) had to be linked to the enquiry mandated by section
153(7) as to what is “ reasonable and just ”, for the Court to arrive at a single
value judgment:
“[80] It is clear that s 153(1) (a)(ii) and s 153(1) (b)(i)(bb) are
inextricably linked to s 153(7). On an application to set aside the result
of a vote in terms of any of these subsections, the court is enjoined by s
153(7) to determine only whether it is reasonable and just to set aside
the particular vote, taking into account the factors set out in s
153(7)(a)–(c) and all circumstances relevant to the case, including the
purpose of business rescue in terms of the Act. Put differently, the vote
would be set aside on application on the grounds that its result was
inappropriate, if it is reasonable and just to do so in terms of s 153(7).
To my mind this entails a single enquiry and a value judgment.”
[27] Subsequently in the case of Ferrostaal GmbH and Another v Transnet SOC
[27] Subsequently in the case of Ferrostaal GmbH and Another v Transnet SOC
and Another 2021 (5) SA 493 (SCA), the SCA endorsed the test it had
formulated in FirstRand, and again emphasised, in paras 17 to 19, the statutory
purpose of business rescue proceedings namely the restoration of viable
companies and the recognition of the wider interests of stakeholders such as
employees in such restoration.
[28] In Ferrostaal, the applicant had argued that the proposed business rescue plan
was dependent on uncertain future events, such as the successful conclusion of
contractual obligations and the securing of sub -tenancies for the payment of
future rental amounts (paras 20 to 27), and its rejection of the proposed plan
was consequently unobjectionable. The Court agreed, concluding at para 29
that “nothing in [the applicant’s] papers suggests that this concern about the
implementation of the revised BRP and the future commercial viability of [the
company in business rescue] are unsustainable or far -fetched.” I also mention
that the Court was fortified in its conclusion by the fact that the shareholders of
the company in business rescue had failed to provide information which lay in
their exclusive knowledge regarding funding on which the proposed plan relied
(para 26).
[29] Turning, then, to the nature of the Court’s value judgment under section
153(7), this was considered in Reiscor Two (Pty) Ltd t/a Bootleggers v
Anheuser-Busch Inbev Africa (Pty) Ltd and Others 2025 (1) SA 315 (GJ)
(‘Reiscor’). In that matter, one of the issues which arose was whether or not
the creditors had voiced a particular complaint (what the Court terms the
“commercial morality point”) during the meeting of creditors at which the
proposed plan was tabled, and whether their failure to do so precluded them
from raising this issue on their papers. The Court found not. At paras 40 and
42, the Court set out its reasoning as follows:
“[40] In my view, the timing of the raising of the complaint does not
have a bearing on whether the decision was appropriate or not but rather
on the bona fides of the objection and on costs. This is so as the
appropriateness of the decision is to be viewed objectively and thus,
factors which became known after the date of the meeting or only
considered after the date of the meeting should, if relevant, weigh in on
the evaluation of whether the decision to reject the plan was
the evaluation of whether the decision to reject the plan was
appropriate. All circumstances relevant to the case are to be considered.
…
[42] In the supplementary heads of argument filed post the hearing on
this point, counsel for the business rescue practitioners argued that the
commercial morality point could not have been a consideration for
voting against the business rescue plan and cannot be regarded when
this court considers the appropriateness of the major creditors’ vote. I
cannot agree with this latter proposition. The consequence of such an
approach would be that if this court were to find that the
implementation of the plan would be against public policy based on the
commercial morality point, it would be precluded from having regard to
that finding because it was not a consideration of the major creditors at
the time when the decision to reject the plan was communicated, being
12 November 2021. In my view, this is exactly what this court is not to
do as this approach would not be an objective assessment and would
incorrectly limit the facts and circumstances the court should consider
in making a value judgment as required in terms of the New Act. It
should look at all the interests and all the facts as they exist at the time
of adjudication by the court. I will thus consider the commercial
morality point later in this judgment.”
[30] Insofar as Reiscor mandates an objective enquiry unbound by the subjective
motivations of the creditors at the time they voted against the proposed plan,
that appears to me to be plainly correct. If the two -stage approach to the
interpretation of section 153(7) is rejected as held in FirstRand and Ferrostaal,
and sections 153(7) and 153(1)(a)(ii) collapse into a single value judgment to
be exercised by the Court, then the subjective beliefs and motivations of
creditors at the meeting at which the proposal is rejected are not relevant to the
determination.
[31] This approach is supported by the language of section 153(7), which sets out in
terms the considerations which the Court is required to consider in subsections
(a) to (c). Such facts relate to the creditors’ interests, but not their motivation.
[32] It also supports the chapter’s statutory purpose, having regard to the interests
which stakeholders such as employees and trade unions may have in the
continued existence of the business. While such parties are “affected persons”
continued existence of the business. While such parties are “affected persons”
under section 128 and must be notified and given an opportunity to address the
meeting which considers the proposed business rescue plan under section 151,
they do not hold a voting interest in their capacity as employees or
representatives. It may be, as the SCA pointed out in FirstRand and
Ferrostaal, that their interests are relevant to the Court’s consideration under
section 153 of what is appropriate, just and reasonable.
[33] I do not read Reiscor as mandating a de novo enquiry into the prospects of
rescuing the company through business rescue, unmoored from what is
proposed in the business rescue plan which was rejected. That enquiry is
properly located at the commencement of business rescue. Re -litigating that
question would emasculate the statutory scheme. Once business rescue has
commenced, section 150(2) requires a proposed business rescue plan to
“contain all the information reasonably required to facilitate affected parties in
deciding whether or not to accept or reject the plan”, and sets out what
information must be included at a minimum. As already mentioned above,
sections 151 to 153 then deal in some detail with the procedures to be followed
in considering, approving and implementing, or rejecting the plan, and
attendant consequences. The statutory preference as it appears to me from
those provisions is for a business -like, efficient and informed engagement
among creditors (and, potentially shareholders) on the merits of the proposed
plan, with litigation as the fall-back position.
[34] On this interpretation, the Court will step in to set aside the vote rejecting a
business rescue plan where this is required to achieve a just and reasonable
outcome in the circumstances of the particular case, but will not lose sight of
what it is that the plan proposed and how, and whether, that might be achieved
with particular reference to the interests of creditors who rejected it.
THE FACTUAL BACKGROUND: THE FIRST BUSINESS RESCUE
[35] A significant portion of the applicant’s founding papers concerns the affairs of
the Louis Group, described as a family -owned South African and international
group of companies, of which LGSA is a part. The applicant alleges the Louis
Group collapsed as a result of financial mismanagement and misappropriation
of investor funds, relying inter alia on the 2013 liquidation of Louis Group
of investor funds, relying inter alia on the 2013 liquidation of Louis Group
entities in the Isle of Man, findings of the Isle of Man courts against Alan Louis
as director of the Isle of Man entities, and a Financial Services Board
investigation in South Africa. The respondents’ position is that such
allegations are largely unsubstantiated, irrelevant, and based on hearsay.
[36] I agree that such issues are not necessary for the determination in the present
proceedings, and particularly the counter -application. Suffice to say that the
Louis Group is facing regulatory and legal headwinds in South Africa and
abroad, which remain, at least in part, subject to dispute. Absent admissible
evidence of specific and relevant wrong -doing on the part of LGSA’s directors
or SSW’s directors, such issues do not have a bearing on the question whether
it is just and reasonable to set aside the independent creditors’ vote on the
proposed business rescue plan.
[37] LGSA is described as a finance and holding company within the Louis Group.
At one point it owned significant commercial and residential properties, and
was the holding company to a range of operational subsidiary companies. By
the time that the current business rescue commenced in 2023, however, the
only operational subsidiary of LGSA was Smartsurv Wireless (Pty) Ltd
(‘SSW’), described in the papers as operating in the telecoms and data
management spheres. LGSA holds SSW indirectly through its shareholding of
a company called iCat (Pty) Ltd (‘iCat’), which in turn is the sole shareholder
of SSW. LGSA has no employees and is not operational other than as a
holding company.
[38] At the commencement of the current business rescue, the section 129 board
resolution identified LGSA’s directors as Brian Louis, Michael Louis, and
Colia Louis.
[39] In addition to its indirect interest in SSW, it appears that LGSA holds loan
claims of some R 170 million, of which the second respondent has said that
only approximately R 18 million are capable of collection.
[40] The current business rescue was preceded by what was initially a winding -up
application brought by Investec Bank Limited (‘Investec’) in February 2013.
Investec had funded various property syndication schemes and had taken
mortgage bonds as cross -collateral over many, if not all, of the Louis Group’s
mortgage bonds as cross -collateral over many, if not all, of the Louis Group’s
properties in South Africa, including hotels and other commercial and
residential properties. The liquidation proceedings were converted into a
business rescue by agreement (‘the first business rescue’). Mr Trevor Glaum
was appointed as the business rescue practitioner in the first business rescue.
His initial focus was on paying Investec and Standard Bank as secured
creditors from funds realised for that purpose through the sale of LGSA’s
assets.
[41] A business rescue plan in the first business rescue was belatedly published on
29 November 2019. It was tabled on 14 February 2020 and rejected by the
independent creditors.
[42] The trustees of the Alan Louis Family Trust made binding offers to some
independent creditors as envisaged by section 153(1)(b)(ii) of the Companies
Act, but these were rejected. This prompted Mr Glaum to close the meeting,
and inform creditors of the intention to apply for the conversion of the first
business rescue to liquidation proceedings.
[43] The Alan Louis Family Trust and related parties then launched an application
for, among other relief, declarators relating to their offers which they had
made. They failed in High Court but obtained leave to appeal to the Supreme
Court of Appeal. While the appeal was pending, Mr Glaum passed away and
was replaced by another business rescue practitioner. On 28 April 2023, the
SCA dismissed the appeal.
THE SECOND, CURRENT BUSINESS RESCUE
[44] Independent creditors, including the applicant, then began to prepare papers for
the liquidation of LGSA. But, as mentioned, on 18 May 2023 LGSA’s
directors filed the section 129 resolution, placing LGSA in business rescue
once more.
[45] Although the liquidation papers were filed the following day, on 19 May 2023,
the matter was removed from the roll as a result of the moratorium on
liquidation proceedings provided for by section 133 of the Companies Act.
[46] In the current business rescue, the applicant’s claim against LGSA was initially
rejected by the second respondent, which led the applicant to file an urgent
application. On 10 January 2024, the second respondent then confirmed the
applicant's claim and the urgent application was withdrawn.
[47] On 5 March 2024 the second respondent circulated a proposed business rescue
plan for the creditors’ consideration. It reflects creditor claims in a total
amount of R 315,688,942 (that amount has subsequently increased through the
recognition of SSW’s claim arising from its provision of post -commencement
finance in an amount of R 30 million in the first business rescue proceedings,
as well as interest), proposing settlement payments of just over R 71 million to
creditors, dependent on their respective categories (of which there are eight).
[48] The proposed plan envisaged the restructuring and replacement of LGSA debt
with, on the one hand, redeemable preferent shares (class A) issued primarily to
independent creditors (identified as categories C, D1, D3 and E), and, on the
other, convertible preferent shares (class B) issued mainly to subsidiaries and
shareholders of LGSA. The equity in class A shares would amount to
approximately R 43 million, and in class B shares to approximately
R 26 million. Class B shares would share in dividends, but be subordinated in
favour of redeemable preferent shares (class A) being settled first.
[49] So-called statutory creditors, operations suppliers and small trade creditors (of
less than R 100 000) would not be issued shares, but paid cash in monthly
instalments. The total proposed cash settlement would amount to just over
R 1.4 million.
[50] Importantly, the cash flow necessary for the redemption of the redeemable
preferent shares and payment of the cash settlement will be derived primarily
from future dividends received from SSW, which would become a direct
subsidiary and underlying asset of LGSA, without the intercession of iCat.
SSW’s future revenue forecasts are therefore key. The plan includes a
summary forecast of SSW’s revenue, but does not otherwise provide any
meaningful substantiation of the forecast. All parties accept that the success of
the proposed business rescue plan hinges entirely on the success of SSW’s
the proposed business rescue plan hinges entirely on the success of SSW’s
future business over a 5 to 7 year horizon – which is the time the plan
envisages for the redemption of the preferent shares.
[51] The current directors of SSW are members of the Louis family, Dean and
Emile Louis. They appear to be shareholders in LGSA, and may be debtors. It
is fair to say that the applicant treats unsubstantiated information provided by
SSW’s directors with suspicion. The second respondent identifies them as the
nephews of Alan Louis, pointing out that there is no evidence of any
wrongdoing on their part. Upon adoption and execution of the proposed plan,
the proposed plan envisages the second respondent taking up a position on
SSW’s board.
[52] The proposed plan records that there had been no progress on the collection of
debts (loan receivables) from entities and persons related to the Louis family
since the commencement of the first business rescue, that records relating to
such loans were unsatisfactory, and that proceedings had not been instituted
during the first business rescue and had likely prescribed. The plan indicates
an anticipated collection of no more than R 18 – R 22 million.
[53] The proposed plan further records that the cost of the current business rescue is
funded by the Alan Louis Family Trust, a major shareholder and creditor, by
way of post -commencement funding (‘PCF’) as envisaged by section 135 of
the Companies Act. It further records an agreement with the Trust for payment
of a success fee upon adoption of the proposed plan of R 2.5 million (when the
plan was presented, the second respondent proposed an amendment to reduce
that to R 1.5 million, which was not adopted). The proposed plan points out
that the costs of the first business rescue proceedings, in an amount of
R 30 million, were funded by way of PCF from SSW, which enjoys a preferent
claim in the event of a liquidation of LGSA, but which will constitute a
concurrent claim in the event of the proposed plan being approved.
[54] The proposed plan concludes that, for comparative purposes, the liquidation
dividend would be 4 cents in the Rand in which independent and non -
independent creditors would share alike, as against a realised business rescue
dividend of approximately 25 cents in the Rand, favouring independent
dividend of approximately 25 cents in the Rand, favouring independent
creditors. The calculation of the liquidation dividend is not set out in detail.
However, on the basis of this comparison, the second respondent recommended
the adoption of the proposed business rescue plan.
[55] On 11 March 2024, the applicant requested signed annual financial statements
and management accounts for SSW, as well as signed annual financial
statements for iCat, in order to consider the merits of the proposed business
rescue plan for LGSA. The second respondent declined the request on the
basis that the directors of those entities had refused to provide those
documents, and he was not in a position to demand that they be provided as
SSW did not fall under the business rescue. He later also said that current
audited financial statements were not yet available.
[56] After initially being set down for 15 March 2024, the meeting contemplated in
section 151 of the Companies Act was held on 19 March 2024, at the offices of
SSW. The transcript of the meeting is on record. The independent creditors
raised two principal concerns (these were by no means the only points of
contention, but they are the ones which have crystallised on the papers): the
position which the second respondent adopted towards what the independent
creditors said were more than R170 million in loans owed to LGSA by
members of the Louis family and related entities, and the absence of historical
financial information for SSW.
[57] As regards SSW, at one point, the trustee for the Alan Louis sequestrated estate
complains: “How can we possibly make an informed decision about these
hockey stick forecasts, if you won't disclose what's going on in the company,
…”. The complaint is illustrative of the attitude adopted by independent
creditors – they required much fuller, independently audited supporting
documentation. The second respondent reiterated that he did not have the
authority to force disclosure of SSW’s historical financial statements over the
objections of its directors, since SSW was not in business rescue, and that he
was advised that its current financials had not yet been signed off.
[58] While there can be no doubt that the ensuing engagement was heated, it cannot
[58] While there can be no doubt that the ensuing engagement was heated, it cannot
be said that the request for SSW’s verified financial information was
unreasonable. It is correct that the second respondent is not in a position to
issue instructions to SSW’s directors. But where the business plan he proposes
hinges entirely on SSW’s future financial performance, he cannot complain
when, as a consequence of supporting information being unavailable, creditors
feel unable to approve the plan.
[59] On the debit loan accounts, the independent creditors were not satisfied that
LGSA’s claims had prescribed to the extent which the second respondent
claimed. They accused the second respondent of relying solely on the say-so of
the debtors, and that this did not meet his obligations to investigate the claims.
[60] The independent creditors indicated that they were dissatisfied with the plan.
They did, however, request further information to assess whether they may be
persuaded to adopt the plan. The second respondent undertook to provide the
debit loan information sought, including historic ledgers, and, within his legal
constraints, the historic financial statements for SSW. The meeting was
adjourned to 5 April 2024.
[61] A limited amount of further information was provided in the run -up to the
following meeting. Neither the debit loan information nor audited financial
statements for SSW were provided in the form that had been requested.
[62] In a circular on 31 March 2024, the second respondent indicated that the
financial statements would be provided in “concise format”, and that he had
been unable to extract the ledger information relating to the debit loans in the
time available. The circular included a spreadsheet said to be extracted from
SSW’s historic financial statements, together with notes and assumptions used
for SSW’s future revenue forecast.
[63] The circular also introduced an option whereby independent creditors would
obtain shareholding in a special purpose vehicle that would take cession of
R75.9 million of LGSA's loan debts, in exchange for those creditors releasing
LGSA from any further obligation.
[64] At the meeting on 5 April 2024, the second respondent stated that he was
satisfied that the bulk of the claims had prescribed or were not recoverable. He
said he had conducted his own investigation, he had considered the supporting
said he had conducted his own investigation, he had considered the supporting
documentation made available during the first business rescue and took account
of the fact that Mr Glaum had attempted recovery and had decided, on legal
advice, not to prosecute the claims further. But the independent creditors were
not satisfied in the absence of substantiation. In those circumstances the
special purpose vehicle proposed would not address their concerns.
[65] Nor were they content to rely on what they regarded as the say -so of SSW’s
directors to substantiate the assumptions on which the SSW financial forecast
relied, which were now spelled out but not supported by audited statements. It
is clear they regarded SSW’s directors with considerable scepticism due to
their family relationships.
[66] The business rescue plan was put to a vote. It was rejected by 100% of the
independent creditors present at the meeting, representing 23% of claims. As
envisaged by section 153(1)(a)(ii) of the Companies Act, the second
respondent then advised the meeting that LGSA would apply to set aside, as
inappropriate, the rejection of the proposed plan.
THE PRESENT PROCEEDINGS
[67] By the time the applicant launched the main application on 23 April 2024,
LGSA had still not applied under section 153(7). On 15 May 2024 LGSA and
the second and third respondents filed their notice of opposition in the main
application, which was consequently removed from the unopposed roll.
[68] On 24 May 2024 the second respondent sought once more to persuade the
independent creditors of the merits of the continued business rescue and
adoption of the proposed plan, under which, he said in correspondence,
independent creditors would receive 23c in the Rand on average.
[69] He re -iterated that the amount required to settle these claims, some
R 45.4 million, would be recovered from dividends out of SSW as well as some
R 18 million from debtors. The second respondent maintained that the
“feasibility and viability of the R45.4million is supported by the future growth
plans and current performance of SSW”. He did not provide any additional
information regarding either debtors or SSW’s current or projected earnings
information regarding either debtors or SSW’s current or projected earnings
forecast. He did, however, point out that business rescue offere d the efficient
restructuring of LGSA and its subsidiaries, and that liquidation of LGSA would
have a negative impact on SSW’s contract revenue stream and be detrimental
to all affected parties.
[70] The second respondent concluded by saying that unless the proposed plan was
accepted, he would terminate the business rescue and apply for liquidation.
[71] One month later, on 21 June 2024, LGSA and the second respondent together
launched the counter -application. The applicant filed his answer in the
counter-application late in October 2025.
[72] The main application and counter -application were set down for hearing on
17 February 2026. On 11 February 2026 the second respondent filed an
extensive replying affidavit in the counter -application. The accompanying
application for condonation of the late filing thereof is not opposed and the
applicant did not ask for leave to respond by way of a further affidavit.
[73] In the reply, the second respondent has refined his case, based on steps he has
taken since the litigation commenced. The case he puts up deserves careful
consideration.
SSW’s revenue forecast and the business rescue dividend
[74] As regards SSW, the second respondent says that from November 2024 to
January 2025 he engaged with the directors of SSW regarding the outstanding
audited accounts for 2022 and 2023, and he now attaches them to the reply. He
says they bear out the revenue forecasts on which the proposed plan relies, at
net present value.
[75] In the reply, the second respondent also provides greater specificity regarding
what he says is the business rescue dividend for independent creditors. This
ranges from 12.9 c/Rand for the applicant (category E) to 27.2 c/Rand for other
independent creditors, redeemed over four years, if the business rescue plan is
implemented. These figures and time scales differ somewhat from what the
second respondent has previously put up, and there is no explanation.
[76] The applicant did not seek to file a further affidavit to take issue with these
revised figures put up in reply.
[77] In supplementary written argument, counsel sought to present updated
calculations of the business rescue dividend, engaging on a factual level with
what he said were discrepancies between the figures presented in reply and
those presented in the proposed plan. Counsel for the second respondent
objected, and rightly so. It is trite that submissions do not constitute evidence.
This is not to question the integrity of counsel making the submissions. The
point is a different one: the Court has no way of knowing whether the facts
given to counsel, and repeated from the Bar, are correct or complete. In motion
proceedings, it is the affidavits which constitute both the pleadings and the
evidence (see Chairperson, Council of the University of South Africa and
others v Afriforum NPC 2022 (2) SA 1 (CC) para 70; Fischer and Another v
Ramahlele and Others 2014 (4) SA 614 (SCA) para 13).
[78] The second respondent also presents for the first time an explanation, albeit
still in general terms, of SSW’s subscription -based business model, which, he
says, supports revenue growth through a combination of subscription rates
escalating, new contracts added at higher rates, and additional services added
on to existing subscriptions. In combination with the cost of hardware
reducing relatively as a direct cost component, he explains that this results in
contribution income increasing annually at a greater rate than the overhead
costs. This, he says, explains what some of the independent creditors have
referred to as SSW’s “hockey-stick” forecasts (i.e. the steep increase in revenue
in later years) on which the business rescue plan hinges, and, he says, renders it
viable.
[79] In reply to the applicant’s complaint in the answering affidavit that the second
respondent has failed to explain precisely how revenue increases will be
achieved, or what capital will be required to achieve it, the second respondent
says that he “cannot control the growth of SSW”. That is true, and, as the
says that he “cannot control the growth of SSW”. That is true, and, as the
applicant has pointed out, it will remain true even if SSW becomes a direct
subsidiary of LGSA and the second respondent joins SSW’s board as one of
three directors with greater influence over SSW’s affairs than he currently
holds.
[80] In heads of argument, counsel for the second respondent points out that under
business rescue any company must invariably trade its way out of financial
distress over a period of time. As a statement of legal principle, that is
unassailable. I also accept that this will entail some risk as a matter of course,
and I am not convinced that it is appropriate, as the applicant would have it, to
apply a risk contingency to the calculation of the likely business rescue
dividend.
[81] The difficulty I have is a different one, namely that it is not LGSA that will
trade its way out of business rescue. LGSA’s rescue relies entirely on the
financial performance of another entity, SSW, controlled by a majority of
directors who neither are, nor will be, under the authority and direction of the
second respondent as envisaged in business rescue proceedings under the
Companies Act.
[82] Put differently, I am less concerned with the precise numeric value of the
business rescue dividend (although that is relevant) , than with the fact that
LGSA relies on SSW for its rescue, in circumstances where the second
respondent will have only limited control over SSW’s operations, and certainly
not the kind of authority envisaged by the business rescue provisions of the
Companies Act.
[83] When the applicant in answer raised the concern that the second respondent
would be only one of three directors of SSW, the second respondent’s reply
does no more than to assert his independence, and to say that “The Louis
family will not be involved. The directors of SSW are Dean and Emile Louis.”
That does not address the issue.
[84] In those circumstances I would want to be satisfied of a c lear and persuasive
case made out of SSW’s revenue prospects, considered in light of the interests
referred to in section 153(7) and/or the objects of business rescue more
generally. I am not satisfied that the a general, if detailed, explanation of
SSW’s business model and the filing of record of historical audited financial
SSW’s business model and the filing of record of historical audited financial
statements clears that hurdle , even having regard to the business rescue
dividend which the second respondent now puts up (12 c/R over four years for
the applicant, 27 c/R for other independent creditors, over four years).
The loan accounts and the liquidation dividend
[85] As regards the loan accounts, in the reply the second respondent sets out in
more detail his reasons for saying that the bulk of the loan accounts are
irrecoverable.
[86] He says this is because most of the debit loan accounts concern a farming
enterprise, Kamsberg Farming (Pty) Ltd (‘Kamsberg’), now in liquidation. He
engaged with the liquidator of Kamsberg over the period January 2025 to May
2025, and established that this entity is, to a large extent, the cause of the debit
loan accounts. The loan debtors invested in this entity and advanced loans
through various Louis trusts. Kamsberg’s liquidator rejected the Louis trusts’
claims, however, and the second respondent says the rejection has been upheld
in the Namibian courts. LGSA’s claim was rejected outright, as it was not a
creditor of Kamsberg.
[87] The second respondent says that in his view, claims against the loan debtors,
which will have to be instituted in Namibia, either prescribed during the first
business rescue, or will fail because, as he explains with reference to specific
claims and debtors, there are no longer executable assets or the debtors have
been wound up.
[88] The second respondent further says that his investigations have not revealed
any direct loan claims against any Louis family members, including LGSA’s
directors. This is despite several of them appearing on the list of debtors which
was compiled in the first business rescue, as he admits; that their names still
appeared on the Excel working notes which the second respondent
inadvertently presented to the meeting on 5 April 2024; and that the applicant
has taken the point on the papers that prescription will not run against LGSA’s
directors, which he says includes not only the current directors but also Dean
Louis and Emile Louis.
[89] The second respondent says the fact that the names of various Louis family
members appear on his work notes shows that he has given these claims due
consideration. Unfortunately, he does not find it necessary to deal with each
respective claim (there are only eleven on the list which was compiled in the
first business rescue, five of which are natural persons), and to take the Court
into his confidence as to the specific reason he has discounted each of them.
[90] A second aspect of the liquidation dividend (which the second respondent
continues to set at approximately 4 c/Rand in the reply) is the value placed on a
possible sale of SSW. In the proposed business rescue plan, the gross value of
this sale is said to be R 35 million (elsewhere, the figure is said to be
R 30 million), with a net return to LGSA of R 5.5 million taking into account
SSW’s PCF in the first business rescue of R 29.5 million
[91] In the reply, the gross value of such a sale is now said to be R 65 million, and
its net value is variously said to be R12 million or R 28 million, depending on
the claims and costs to be deducted, or, still, R 5.5 million. The discrepancy is
not fully explained.
[92] The most that can be said in those circumstances is that I agree with the
applicant that the liquidation benefit on which the second respondent relies of 4
c/Rand is likely understated , when this is considered against the business
rescue dividend on which the second respondent relies (12 c/R for the
applicant, and 27 c/R for other independent creditors), having regard to the
concerns I raised above.
[93] In those circumstances, I do not find it just and reasonable to set aside the
independent creditors’ vote under section 153(7).
The DVH offer
[94] In the reply, the second respondent places on record an offer received from
Stellenbosch Valley Estates & Vineyards (Pty) Ltd (‘DVH’) for the purchase of
10% of LGSA’s shares in SSW and all its other shareholdings, 20% of its loan
10% of LGSA’s shares in SSW and all its other shareholdings, 20% of its loan
claim against iCat, all its loan claims against other debtors, and all outstanding
payments due to LGSA, in consideration for a payment of R 18 million. The
offer is contingent, in substance, upon the independent creditors accepting the
proposed business rescue plan and the applicant withdrawing the main
application and his opposition to the counter -application, or the second
respondent succeeding in the counter-application.
[95] The second respondent calls on the applicant to withdraw his opposition to the
counter-application, which would allow the vote rejecting the business plan to
be set aside, in which case LGSA offers to pay the applicant’s wasted costs.
The applicant has not taken up the offer.
[96] The second respondent says, rightly, that the sale of SSW’s equity is provided
for under the plan as an alternative.
[97] It appears the primary impact of the DVH offer, if accepted, is to shorten the
time periods for the payment of the independent creditors “ from five and six to
two years” through an early cash injection. In heads of argument the applicant
accepts that the DVH offer alters the position only slightly.
[98] In those circumstances, the DVH offer does not sufficiently alter the position
for me to find that it is just and reasonable to set aside the vote of independent
creditors to reject the proposed plan.
The continued control of the Louis family
[99] The second respondent in reply also deals with the applicant’s allegation that
he is not acting independently but on instruction of members of the Louis
family. The applicant here relies on an email of one of the directors of LGSA,
Mr Brian Louis, dated 23 November 2023. The context of the email is the
request by Mr Andrew Stewart, the attorney representing the insolvent estate of
Alan Louis, requesting the loan account ledgers I have already referred to
above.
[100] It appears that Mr Brian Louis inadvertently replied to Mr Stewart instead of
the second respondent. In the reply, Mr Brian Louis said among other things
that “I am undecided whether to suggest we ignore him or retort with a legal
that “I am undecided whether to suggest we ignore him or retort with a legal
opine and an account for services. You can relay that AL Trust is loathed to
pay you for time to respond to empty threats and false alarms.”
[101] The applicant relies on this email as evidence that Mr Brian Louis is issuing
instructions to the second respondent regarding his engagement with creditors
and the performance of his functions, and that the second respondent lacks
independence.
[102] The second respondent’s position is that he did not act on the instruction, that
he does not take instructions from LGSA’s directors, and that Mr Brian Louis
has apologised. Any apology would take the matter no further, and in any
event it appears that Mr Brian Louis has apologised for sending the email to the
incorrect recipient rather than overstepping.
[103] More convincingly, the second respondent points out that he is required to
maintain a working relationship with the directors of LGSA which, he says,
explains his consultation with them and his reliance on information obtained
from them regarding LGSA’s affairs.
[104] It is hard to fault the conclusion of the applicant that Mr Brian Louis’ email
strongly suggests that he does not consider himself, in the language of section
137 of the Companies Act, to be under the authority and subject to the
directions of the second respondent. The tone of the email suggests an
expectation of being obeyed that is not easy to reconcile with the authority
structure imposed by the Companies Act on directors who operate under
business rescue. But, in the end, it does not follow that Mr Brian Louis’
attitude constitutes evidence that the second respondent is acting improperly.
[105] I also accept that the applicant, and the independent creditors more widely,
approach any information which the second respondent obtains from members
of the Louis family with suspicion unless it is objectively substantiated. It may
be that they would not insist on such substantiation if SSW’s directors were not
members of the Louis family, or if LGSA’s debtors were not members of, or
related to, the Louis family. But it cannot be said that they have closed their
related to, the Louis family. But it cannot be said that they have closed their
minds to a fair assessment of such information, had they received it.
[106] Independent creditors have been faced with delays in realising their claims for
many years – this is through no fault of the second respondent, but that does
not avail the independent creditors. They were presented with a business
rescue plan which the second respondent knew, on his own version, he would
be unable to properly substantiate with financial information which the
directors of SSW refused to provide. The second respondent appears to have
been galvanised into a proactive investigation of LGSA’s loan claims only
through ongoing pressure, including this litigation. Even now, there is no clear
evidence of what he has found with reference to specific claims. The attitude
of Mr Brian Louis as it appears from the email of 23 November 2023 does not
suggest a director who submits to the authority of a business rescue
practitioner. Taken cumulatively, one can understand that the independent
creditors’ experience would colour their perception of the continued
involvement of the Louis family in LGSA’s affairs, and engagement with the
second respondent.
[107] They are not required to bring a wholly dispassionate mindset to bear on these
issues, so long as they remain open to a fair and rational consideration of the
proposed plan. In the present matter, the second respondent’s allegation of a
stubborn ulterior purpose on the part of the independent creditors (namely, to
achieve liquidation of LGSA at all costs) is belied by their repeated and
insistent requests that they be provided with the necessary information to
properly consider the proposed business rescue plan’s assumptions and
conclusions.
[108] I am not satisfied that this constitutes grounds for setting aside the independent
creditors’ vote under section 153(7).
CONCLUSION
[109] On balance, for the reasons given above, I am not satisfied that the second
respondent has shown on an objective enquiry of all the facts on record that the
independent creditors’ votes to reject the business rescue proposal for LGSA
were inappropriate, and that it is just and reasonable to set aside their vote.
[110] It follows, and the parties were agreed, that the main application must succeed.
STRIKING OUT
[111] The second respondent has asked that various allegations regarding the
propriety of his conduct be struck out on the grounds that they are scandalous,
and vexatious.
[112] The applicant points out that in order to substantiate the alternative relief he
sought for the second respondent’s removal, he had to present to the Court his
reasons for doubting the second respondent’s impartiality.
[113] There can be little doubt that the relationship between the parties is
acrimonious, and characterised by a high degree of distrust. The reasons are
not difficult to see from what I have set out above.
[114] This is the context against which I have considered the applicant’s allegations
of malfeasance. I do not find them to be substantiated on the evidence, and
have disabused my mind of such allegations. There is no prejudice to the
second respondent, and consequently no call for striking out (see Beinash v
Wixley 1997 (3) SA 721 (SCA) at 734B).
COSTS
[115] Both parties were in agreement that costs on Scale C are appropriate in respect
of the main application and the counter -application. There is no reason for
costs not to follow the result.
[116] The application for joinder was not opposed. I do not consider it necessary to
make a costs order in respect thereof.
[117] The application for striking out did not succeed, though not for want of serious
allegations which I have found to be unproven. In those circumstances it is
appropriate that both parties pay their own costs.
ORDER
[118] In the premises I make the following order:
1. The fifth to fifteenth respondents are joined to the proceedings, with the costs
of the joinder application being costs in the cause.
2. The application for striking out is dismissed, with each party to pay its own
costs.
3. The application to set aside the votes by creditors on 5 April 2024 rejecting the
business rescue plan is dismissed, with costs on Scale C.
4. The business rescue proceedings which commenced by way of resolution dated
17 May 2023, filed on 18 May 2023, are converted into liquidation
proceedings, and the first respondent, Louis Group (SA) (Pty) Ltd, is hereby
placed under provisional liquidation in the hands of the Master of the High
Court.
5. A rule nisi is issued calling upon all interested parties to show cause, if any, on
20 July 2026, as to why the following order should not be made:
a. That Louis Group (SA) (Pty) Ltd be placed in final liquidation; and
b. That the costs of the main application be costs in the final liquidation in
the event of no opposition.
6. Service of the Order is to be effected:-
a. By one publication in each of the Cape Times and Die Burger
newspapers;
b. By service on the South African Revenue Services at 2 […] H[…],
S[…] Avenue, Cape Town; and
c. By service on Louis Group (SA) (Pty) Ltd at its registered address at
N1 House, […] L[…] R[…] Street, Goodwood, Western Cape.
d. By service on the employees of the Louis Group (SA) (Pty) Ltd , if any;
and
e. By service on all registered trade unions, if any.
_____________________________
K S SALLER
ACTING JUDGE OF THE HIGH COURT
Appearances:
Applicant: Adv D Baguley
Taitz & Skikne Inc
1st to 3rd Respondent: Adv A Oosrhuizen SC
Adv R Fitzgerald
Rubensteins Attorneys