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[2026] ZANWHC 161
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Zizwe Open Cast Mining (Pty) Ltd v Lethabo Minerals (Pty) Ltd and Another (2026/104756) [2026] ZANWHC 161 (15 June 2026)
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IN
THE HIGH COURT OF SOUTH AFRICA
NORTH
WEST DIVISION, MAHIKENG
Reportable
Case
no:2026-104756
In
the matter between:
ZIZWE
OPEN CAST MINING (PTY) LTD
APPLICANT
and
LETHABO
MINERALS (PTY) LTD
FIRST
RESPONDENT
THE
COMPANIES AND INTELLECTUAL
PROPERTY
COMMISSION
SECOND
RESPONDENT
Coram:
Wessels
AJ
Heard:
29
May 2026
Delivered:
This judgment was handed down electronically,
circulated to the parties’ representatives via email, uploaded
to CaseLines,
and released to SAFLII. The date and time for the
handing down of the judgment are deemed to be 14h00 on 15 June 2026.
Summary:
Companies — Business rescue — Application in terms of
s
131(1)
of the
Companies Act 71 of 2008
— Commencement of
proceedings — When
s 131
application 'made' — Application
made when issued, served on company and Commission, and affected
persons notified in prescribed
manner — Meaning of 'applies' in
s 132(1)(b)
synonymous with 'made' in
s 131(6)
and 'apply' in
s
131(1)
— All three phrases carrying same meaning —
Lutchman NO v African Global Holdings (Pty) Ltd
[2022] ZASCA
66
applied.
Companies
— Business rescue — Voluntary resolution in terms of
s
129
— Board adopting resolution while court-driven proceedings
pending — Whether board divested of authority —
Section
129(2A)
confined to liquidation context — Board not expressly
divested of authority by mere filing of
s 131
application —
However,
s 132(1)
architecturally providing for single commencement
event only — Word 'or' separating triggering events disclosing
legislative
intention that voluntary and court-driven routes mutually
exclusive — Two competing business rescue processes incapable
of
co-existing in respect of same company simultaneously.
Companies
— Business rescue — Voluntary resolution — Setting
aside — Just and equitable ground —
Section 130(5)(a)(ii)
— Resolution adopted without disclosure on eve of hearing —
Board fully aware of pending
s 131
proceedings — Resolution
adopted for ulterior purpose of retaining control over identity of
business rescue practitioner
— Not adopted in genuine pursuit
of objects of business rescue — Directors not acting in good
faith or for proper purpose
as required by
s 76
— Just and
equitable to set aside —
Panamo Properties (Pty) Ltd v Nel
NO
[2015] ZASCA 76
applied.
Companies
— Business rescue — Voluntary resolution — Filing —
Section 129(2)(b)
— CIPC Practice Note 3 of 2021 having status
of binding subordinate legislation — Mere submission of
documents to CIPC
not constituting filing — Filing occurring
only upon confirmation by CIPC team member — Resolution having
no force
or effect prior to such confirmation.
Companies
— Business rescue — Abuse of process — Voluntary
business rescue mechanism susceptible to abuse —
Section 129
not a tactical instrument available to directors for purposes other
than genuine rescue — Court having inherent jurisdiction
to
protect its own process — Ambushing court and opposing party
with documents during hearing constituting abuse.
Companies
— Business rescue — Reasonable prospects of rescue —
Standard of proof — More than arguable possibility
but less
than reasonable probability —
Oakdene Square Properties
(Pty) Ltd v Farm Bothasfontein (Kyalami) (Pty) Ltd
[2013] ZASCA
68
and
Newcity Group (Pty) Ltd v Pellow NO
[2014] ZASCA 162
—
Two decisions complementary authorities — Oakdene foundational;
Newcity confirming court exercises value judgment
in wide sense on
primary facts — Neither decision displacing other.
Companies
— Business rescue — Jurisdiction — Jurisdiction
determined by company's registered address — Non-exclusive
jurisdiction clause in agreement not preventing applicant from
approaching court of competent jurisdiction — Fabricated
composite quotation attributed to underlying agreements advanced in
support of jurisdiction point — Credibility of first respondent
adversely affected.
Companies
— Business rescue — Costs — Punitive costs order
warranted by conduct of board — Practical futility
where
company placed in business rescue and costs would rank as
pre-commencement claim against distressed estate — Costs
ordered as costs in the business rescue.
JUDGMENT
Wessels AJ
Introduction
[1]
Before
this Court is an application brought in terms of
s 131(1)
of the
Companies Act
[1
]
(‘the Act’) by the applicant, a creditor of the first
respondent, a financially distressed chrome mining company, for
an
order placing that company under supervision and commencing business
rescue proceedings (‘
s 131
application’).
[2]
The matter came before me for argument on
29 May 2026. What was envisaged as a straightforward hearing of a
business rescue application
turned, by reason of the extraordinary
conduct of the first respondent on the eve of and during the hearing
itself, into two avenues
to business rescue, one court-driven and one
voluntary, with the first respondent contending that a last-minute
voluntary resolution
it had taken and filed with the second
respondent (“CIPC”) rendered the
s 131
application moot.
Background
[3]
The applicant is an open-cast mining
contractor operating in the North West, Limpopo and Mpumalanga
provinces. The first respondent
is the holder of a mining right in
respect of the Boshoek Chrome Mine near Rustenburg in the North West
Province (‘the mine’).
The second respondent is cited for
its interest in the proceedings, against whom no substantive relief
is sought.
[4]
The applicant seeks the following order:
that the first respondent be placed under supervision and that
business rescue proceedings
be commenced in terms of
s 131(4)(a)
of
the Act, the appointment of Mr Johan van Greunen of Van Greunen &
Associates Inc. as interim business rescue practitioner
(“interim
BRP”), subject to ratification by the holders of a majority of
the independent creditors’ voting interests
at the first
meeting of creditors; and an order that a resolution adopted by the
board of the first respondent on 27 May 2026,
purporting to place the
first respondent in voluntary business rescue in terms of
s 129
of
the Act, be declared a nullity.
[5]
The relationship between the applicant and
the first respondent originated in a competitive tender process
conducted in early 2024.
The applicant was awarded a contract to
provide open-cast mining services to the first respondent, comprising
pit services, ore
removal, crushing and screening at the mine. A
written Contract Mining Agreement was concluded and implemented from
approximately
August 2024. Additionally, an Escrow Agreement was
concluded between the applicant, the first respondent and an escrow
agent dated
26 September 2024. In terms of the Escrow Agreement, all
proceeds from the sale of chrome ore were to be paid into a
transparent
escrow account and distributed by the escrow agent in
accordance with an agreed-upon priority order. The applicant was
entitled
to insight into all transactions in the escrow account.
[6]
The mining right, as described in the
applicant’s founding affidavit, is the proverbial goose that
lays the golden eggs. In
respect of the mine, it is the cornerstone
of the first respondent’s business. The first respondent does
not itself conduct
physical mining operations but depends on
contractors, such as the applicant, to generate income from the
right.
[7]
From the outset, the mining operations were
plagued by adverse circumstances. When the applicant commenced
operations, the geological
conditions proved more difficult than
anticipated, increasing mining costs and the quality of the chrome
ore was lower than projected.
In addition, the international price
for chrome concentrates, which had been approximately US$ 300 per
tonne at the commencement
of operations in early 2024, plummeted to
approximately US$ 200 per tonne towards the end of 2024, which
represents a decline of
approximately 33%.
[8]
As a result, the first respondent began to
experience financial strain. It failed to pay the applicant
timeously, and the accumulation
of arrear debt led to prolonged
negotiations between the parties. By June 2025, the first
respondent’s total indebtedness
to the applicant was
R94,717,099. In settlement of these amounts, the parties entered into
two agreements. Firstly, a Cancellation
Agreement dated approximately
27 June 2025, in terms of which the mining agreement was cancelled
and first respondent acknowledged
indebtedness of R 56,435,373.40
(‘the Contract Debt’). Secondly, a Settlement Agreement
in terms of which the first
respondent acknowledged a further
liability of R 38,281,725.60 (the ‘Additional Claim’)
arising from the unforeseen
ground conditions. An additional loan of
R 5,000,000 was advanced by the applicant to the first respondent on
27 June 2025. The
last payment received by the applicant from the
first respondent was R11,150,000 on 8 October 2025. In breach of
these agreements,
no further payments have been made by the first
respondent. The total outstanding indebtedness as at the date of the
hearing exceeded
R43 000 000 (comprising the unpaid balance of
the Contract Debt and the entirety of the Additional Claim). All four
of these
agreements concluded between the parties will collectively
be referred to as ‘the underlying agreements’.
[9]
From approximately 15 April 2026, the
applicant began to discover, through independent investigation, that
the first respondent’s
non-payment was not an isolated
cash-flow constraint, but part of a widespread pattern of defaults.
Essential service providers
had withdrawn from the mine and the first
respondent had been placed in the process of deregistration by CIPC
on 17 April 2026,
evidently for failure to file annual returns. The
first respondent’s management, who had consistently assured the
applicant
that the situation was under control, ceased engaging with
the applicant entirely.
[10]
On 28 April 2026, the applicant formally
placed the first respondent on terms, demanding that it either cease
trading under insolvent
circumstances, voluntarily enter business
rescue, or face litigation. This demand was ignored, and this
application was filed with
the Registrar of this Court on 8 May 2026.
Service on all affected persons, including both directors of the
first respondent, was
effected by 11 May 2026 at the latest.
The importance of these dates will be addressed later in this
judgment.
The first hearing
[11]
The matter was initially enrolled for
hearing on 22 May 2026. At that hearing, the first respondent
indicated that it required time
to file a proper answering affidavit.
The matter was accordingly postponed to 29 May 2026 for the filing of
the answering and replying
affidavits and argument.
[12]
The answering affidavit was delivered on 22
May 2026 and was deposed to by Mr Lesego Manzini (‘Mr
Manzini’), the CEO
and a director of the first respondent. What
is immediately apparent from the answering affidavit is what it does
not address.
The deponent does not deny that the first respondent is
in financial distress and does not dispute the quantum or validity of
the
debt acknowledged in the Cancellation and Settlement Agreements
and provides no financial statements, no management accounts, no
indication of the first respondent’s total creditor base, or
any positive evidence of solvency or of a viable path to recovery.
Importantly, the answering affidavit does not challenge the
qualifications or independence of the proposed interim BRP and makes
no mention of any intention to place the first respondent in
voluntary business rescue.
[13]
The answering affidavit confines itself to
three points in limine being that the application lacks urgency or
that any urgency is
self-created, that the jurisdiction clauses in
the underlying agreements concluded between the parties confer
exclusive jurisdiction
on the Gauteng Division of the High Court; and
that the arbitration clauses in the agreements concluded between the
parties, require
the parties to exhaust the contractually agreed
dispute resolution mechanisms before approaching a court. The first
respondent
confirmed the operational stability of its operations,
which it dealt with in a single sentence.
The hearing of 29 May
2026
[14]
What occurred during the hearing of 29 May
2026 is, in my experience, unusual. I set it out chronologically
because the sequence
is directly applicable to the issues I must
decide. Shortly before the commencement of this hearing, the first
respondent filed
a notice in terms of
Rule 6(5)(d)(
iii) of the
Uniform Rules of Court purporting to raise a question of law only,
which in itself was an unusual procedural step, as
this notice was
filed despite the first respondent already having filed an answering
affidavit. This notice disclosed, for the
first time in these
proceedings, that the board of the first respondent had adopted a
written resolution on 27 May 2026, two days
before this hearing,
placing the first respondent in voluntary business rescue in terms of
s 129 of the Act. The notice stated
that the requisite form (Form CoR
123.1) had been duly filed with the CIPC and that business rescue
proceedings had commenced by
operation of law. On that basis, it was
submitted that the s 131 application had become moot.
[15]
Even during the hearing, the first
respondent’s attorneys continually uploaded documents to the
CaseLines platform. These
included the resolution itself, the
purported sworn statement of Mr Manzini in support of the CIPC
application and a CIPC acknowledgement
of receipt. On a brief perusal
of these documents during the hearing, counsel for the applicant
identified several apparent irregularities,
inter alia, the sworn
statement bore typewritten rather than handwritten initials on its
pages. It appeared to bear a computer-generated
signature on the
final page rather than a handwritten one, and to be missing or
deficient in certain required documents.
[16]
The CIPC report generated at 13h50 on 29
May 2026, ten minutes before the hearing commenced, reflected the
first respondent’s
status as ‘IN BUSINESS.’ It did
not reflect any business rescue status.
[17]
I granted the parties an adjournment of
twenty minutes during the hearing to allow the first respondent’s
counsel to read
the two authorities cited by counsel for the
applicant on the question of when a s 131 application is to be
regarded as ‘made’
for purposes of s 132 of the Act. When
the argument resumed, the first respondent’s counsel announced
that he had just received
notification via WhatsApp message and that
CIPC had formally confirmed the acceptance of the filing and that the
first respondent’s
status had been changed to ‘BUSINESS
RESCUE.’ This was confirmed by a Certificate of Confirmation
issued by the Commissioner
of CIPC and subsequently uploaded to
CaseLines, bearing a timestamp of 16h05 (on 29 May 2026) and
recording an effective date of
commencement of business rescue
proceedings of 29 May 2026.
[18]
The CaseLines digital case management
platform is a useful administrative tool for pre-hearing preparation,
but it lends itself
to abuse when it remains open during the course
of a hearing. Unlike a document physically handed up in court, which
is a visible
act, subject to a court’s discretion to refuse it,
an electronic upload happens quietly in the background, without any
formal
step and without necessarily drawing the attention of the
Court or opposing counsel. The party on the receiving end simply does
not have the time to properly consider, verify, or respond to
material introduced in this way. Applicant’s counsel was left
having to deal with documents on the spot whose authenticity had not
been tested and whose implications had not been properly thought
through. This is fundamentally at odds with the principle that each
party must know the case it has to meet. The practical solution
is
that once a matter is called, CaseLines should be frozen, and any
document a party wishes to place before the Court thereafter
should
require leave, with the opposing party given a fair opportunity to
respond. It should not, however, require a court
to freeze the
platform to prevent this. Counsel appearing before a court is
expected to know that documents may not simply be introduced
during a
hearing without leave, regardless of whether the electronic document
system technically permits it. That obligation rests
on counsel
independently of any administrative control. A document uploaded
without leave after the matter has been called is not
properly before
the Court and may be disregarded.
[19]
It is accordingly common cause that by the
time judgment was reserved, the CIPC had formally changed the first
respondent’s
status to ‘BUSINESS RESCUE’ pursuant
to the s 129 filing. The over-arching issue for this Court to
determine is what
legal consequences follow from this sequence of
events. I now turn to deal with the points in limine raised by
the first
respondent.
Urgency
[20]
The
timeworn test for urgency requires the applicant to show that it
could not obtain substantial redress in the ordinary course.
The
first respondent is, on any objective reading of the evidence, a
company in acute financial distress. Its main asset, the mining
right, is dependent on the continued legal existence and operational
activity of the first respondent. The current factual situation
is
that service providers have withdrawn from the site, the first
respondent is in the process of deregistration and a safety
suspension in terms of s 54 of the Mine Health and Safety Act
[2]
has been in force since January 2026, halting full operations. These
issues culminated in Mr Manzini admitting to creditors, in
writing,
to cash flow strain.
[21]
In
these circumstances, a delay of several months for a hearing in the
ordinary course would render the remedy of business rescue
redundant.
By definition, a financially distressed company’s prospects of
rescue diminish with every passing week. As held
in
Koen
and Another v Wedgewood Village Golf & Country Estate (Pty) Ltd
and Others
[3]
it follows axiomatically that business rescue applications should be
treated with the required urgency. Once the business is permitted
to
collapse entirely, no business rescue practitioner can restore it to
viability. The allegation of self-created urgency
is without
merit. The applicant acted with reasonable expedition once it became
aware, from approximately 15 April 2026, of the
true extent of the
first respondent’s financial distress and the widespread nature
of its defaults. It placed the first respondent
on terms on 28 April
2026. The application was launched and served within ten days. An
applicant who first exhausts reasonable
extra-curial steps before
approaching a court cannot be accused of creating its own urgency,
especially in the expedient manner
in which the applicant did so. The
applicant was accordingly entitled to bring the application on an
urgent basis, and I am satisfied
that urgency has been established.
Jurisdiction
[22]
The
first respondent advanced two distinct grounds regarding this Court’s
jurisdiction. Firstly, this Court lacks territorial
jurisdiction
because, on the respondent’s case, SMT does not reside or carry
on business within this Court’s area of
jurisdiction and the
underlying disputes have their seat in Gauteng. This point
borders on the frivolous. The territorial
jurisdiction objection
ignores that the first respondent’s registered address is
situated within this Court’s territorial
jurisdiction in the
North West Province. The Act vests jurisdiction in business rescue
applications in the High Court having jurisdiction
over the company
concerned. As held in
Sibakhulu
Construction (Pty) Ltd v Wedgewood Village Golf Estate (Pty) Ltd
(Nedbank Ltd Intervening)
[4]
,
jurisdiction
for purposes of company status proceedings, including business rescue
and winding-up, is determined by the company’s
registered
address. The first respondent’s registered address is 12 Stone
Ridge Estate, Rockcliff Estate, Cashan, Rustenburg,
North West, which
falls squarely within this Court’s territorial jurisdiction.
[23]
Secondly, that the parties had
contractually submitted to the exclusive jurisdiction of the Gauteng
Division, Pretoria, to which
extent the applicant was not entitled to
approach this Court. The answering affidavit purports to quote
verbatim the jurisdictional
clauses said to be present in all four of
the underlying agreements or in any one of them. The quoted passage,
as contained in
the answering affidavit, states that:
‘
The
parties have agreed, in writing and for valuable consideration, that
disputes arising from or in connection with these agreements
which
plainly includes the alleged debt now relied upon by the applicant
shall be determined by the High Court of Gauteng in its
Pretoria
seat, and that the applicant is not entitled to resile from this
agreement by electing to approach a different division
of the High
Court.’
[24]
The replying affidavit characterises this
quotation, bluntly, as a fabrication. I have had regard to the
content of the underlying
agreements and I agree with the applicant’s
contention on the following basis. The Contract Mining Agreement
provides that
the parties irrevocably and unconditionally consent to
the
non-exclusive
jurisdiction of the High Court, Gauteng Division, in regard to all
matters arising from that agreement. The Escrow Agreement similarly
provides that the parties agree to the
non-exclusive
jurisdiction of the High Court, Gauteng Division, to settle any
dispute or claim arising out of or in connection with that agreement.
The operative agreements, the Cancellation Agreement and the
Settlement Agreement, contain no reference to any particular division
of the High Court at all with regard to all matters arising from
those agreements. None of the four agreements uses the term
‘exclusive’
and none of them contains any prohibition on
the applicant approaching a different division. The first
respondent’s aforementioned
quotation in the answering
affidavit is therefore manifestly false. This relates directly to the
credibility of the first respondent
and to the assessment of bona
fides that pervades this judgment. Consequently, this point is
dismissed.
Arbitration
[25]
The first respondent alleges that the issue
before this Court falls within the ambit of the dispute resolution
clause in the agreements
concluded between the parties. This point is
wholly misconceived as the application does not seek to enforce any
of the underlying
agreements between the parties. No contractual
dispute has been declared. The relief sought in this application, the
placement
of the first respondent under supervision and the
commencement of business rescue proceedings, is the exercise of a
statutory right
conferred on affected persons by s 131(1) of the Act.
It is trite that no arbitrator has the power to place a company in
business
rescue. The arbitration clauses in the underlying agreements
simply have no application to a statutory business rescue
application.
I dismiss this point in limine.
Financial distress
[26]
A
company is financially distressed, as defined in s 128(1)(f) of the
Act, if it appears reasonably unlikely that it will be able
to pay
all of its debts as they become due and payable within the
immediately ensuing six months, or if it appears reasonably likely
that the company will become insolvent within the immediately ensuing
six months. The evidence establishing financial distress
is
overwhelming and, to a great extent, comes from the first respondent
itself. The first respondent owes the applicant an acknowledged,
documented, and undisputed debt in excess of R 43 million. The last
payment by the first respondent was made on 8 October 2025
and no
payment has been made in more than seven months.
Mr
Manzini
’s
letter to creditors on 12 May 2026 acknowledged a temporary strain on
its cash flow and its ability to meet current payment
obligations in
the ordinary course of business and requested a three-month
moratorium. This is, as counsel for the applicant correctly
submitted, a textbook acknowledgement of commercial insolvency. The s
54 suspension notice under the Mine Health and Safety Act
[5]
has been in force since January 2026, halting full mining operations.
It is important to note that essential service providers
have
withdrawn from the mining site, and the first respondent is in the
process of being deregistered by the CIPC for failure to
file annual
returns. The answering affidavit raises no defence to financial
distress.
[27]
By the time of this hearing, the first
respondent’s own board had adopted a resolution placing the
company in business rescue,
which is an implicit acknowledgement that
the first respondent is financially distressed and that there are
reasonable prospects
of its rescue. Section 129(1)(a) of the Act
requires the board to have reasonable grounds to believe that the
company is financially
distressed as a precondition for adopting such
a resolution. The board, therefore, conceded financial distress by
its own conduct.
Reasonable prospects
of rescue
[28]
Section 131(1) and (4) of the Act reads as
follows:
‘
(1)
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.
…
(4) After considering an
application in terms of subsection (1), the court may-
(a) make an order placing
the company under supervision and commencing business rescue
proceedings, if the court
is satisfied that-
(i) the company is
financially distressed;
(ii) the company has
failed to pay over any amount in terms of an obligation under or in
terms of a public
regulation, or 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.’
[29]
The
standard of proof for a reasonable prospect under s 131(4)(a) of the
Act was established by the Supreme Court of Appeal (‘SCA’)
in
Oakdene
Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami)
(Pty) Ltd and Others
[6]
.
The SCA held that the standard of a reasonable prospect is:
‘
a
lesser requirement than the “reasonable probability”
which was the yardstick for placing a company under judicial
management … 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.’
[30]
The
SCA in
Oakdene
further confirmed that an applicant is not required to submit a
detailed business rescue plan, as that is the domain of the BRP
after
appointment. A solid evidentiary basis is necessary for a court to
objectively evaluate whether the goal of the business
rescue can be
attained, to which end vague allegations do not suffice. Thereafter,
in
Newcity
Group (Pty) Ltd v Pellow NO and Others
[7]
,
the SCA revisited the standard when it held as follows:
‘
It
is plain from the wording of these provisions that a court may not
grant an application for business rescue unless there is a
reasonable
prospect for rescuing the company, i.e., facilitating its
rehabilitation so that it continues on a solvent basis or,
if that is
not possible, yields a better return for its creditors and
shareholders than what they would receive through liquidation.
In
deciding that question, the court exercises a discretion in the wide
sense – it makes a value judgment …’
[31]
Newcity
confirmed
the principle laid down in
Oakdene
that the standard requires more than an ‘arguable possibility’
but less than a ‘reasonable probability’,
based on
reasonable grounds established on the papers
[8]
.
Counsel for the applicant relied primarily on
Newcity
as the latest SCA authority and invited me to follow it. That
submission is correct as a matter of chronological sequence, but
has
to be qualified.
Newcity
does not displace
Oakdene
.
The two decisions stand as complementary authorities.
Oakdene
remains
the authoritative judgment on the threshold standard, defining the
range between arguable possibility and reasonable probability,
the
necessity of a solid evidential basis, and the dual objectives of
business rescue
.
Newcity
confirms and refines the inquiry by characterising a court’s
function as the exercise of a wide discretion in the form of
a value
judgment on the primary facts placed before it. The correct approach,
to my mind, is to apply both authorities together,
not to treat the
latter as superseding the earlier, which is the approach followed in
this judgment.
[32]
In reaching a conclusion on this issue, I
rely on the following facts: the international chrome price, having
fallen to approximately
US$ 200 per tonne in late 2024, has recovered
to above US$ 250 per tonne, a level at which the applicant’s
evidence establishes
that profitable production at the mine is
achievable; the mine has intact, extractable reserves and is not
exhausted; the causes
of the first respondent’s financial
distress are, correctible as governance failures and operational
inefficiencies are the
matters that a competent BRP is equipped to
address; the applicant, a party with firsthand operational experience
of the mine over
fourteen months, has stated its willingness to
return to site and provide start-up capital under a structured
business rescue structure;
the statutory moratorium in terms of s 133
of the Act will stop the piecemeal erosion of the first respondent’s
operational
capacity by individual creditors, which is already
underway; and third-party service providers, Sandton Plant Hire and
LMJ Projects,
have indicated in principle their willingness to return
to site under BRP supervision. Measured against the standard set by
Oakdene
and
Newcity
,
I am satisfied that reasonable prospects of rescue are established.
[33]
On
the question of business rescue producing a better outcome for
creditors than liquidation, the answer is clear. In terms of s
56(d)
of the Mineral and Petroleum Resources Development Act
[9]
,
a mining right lapses upon the holder’s liquidation. The first
respondent’s mining right is its only material asset.
Liquidation would extinguish the mining right, along with the
company’s sole income-generating asset and the only meaningful
source of value for creditors. As both counsel acknowledged in
argument (one of the few matters on which they agreed), liquidation
would be commercially catastrophic for all stakeholders. Business
rescue is not merely preferable to liquidation, it is the only
route
that may preserve any prospect of value for creditors.
The s 129 resolution
[34]
The
first respondent’s main submission is that due to the adoption
of the s 129 voluntary business rescue resolution and its
subsequent
formal acceptance by CIPC (during the course of the hearing), the s
131 application has been rendered moot. Both routes,
it is argued,
lead to the same destination, namely, business rescue. Since the
voluntary process is already underway and has been
formally
confirmed, any court order would produce no additional legal effect.
I cannot accept this submission. The question of
mootness requires a
court to determine whether there remains a live dispute between the
parties and whether any order I might make
would have practical
effect. The application remains alive and the order sought is not
academic, for the reasons that follow. The
answer to this question
lies in interpreting the relevant sections of the Act. The approach
to interpreting legislation, as established
in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[10]
is defined as a single, objective, and unitary process that
attributes meaning to words by considering language, context, and
purpose together from the outset. As a starting point, the provisions
of s 132 of the Act have to be considered. It reads
as follows:
(1) Business rescue
proceedings begin when-
(a) the company-
(i) files a resolution to
place itself under supervision in terms of section 129(3); or
(ii) applies to the court
for consent to file a resolution in terms of section 129(5)(b);
(b)
an affected
person applies to the court
for an order placing the company
under supervision in terms of section 131(1);
…
(emphasis
added)
[35]
It is plain that s 132(1) of the Act
provides that business rescue proceedings begin when the company
files a resolution in terms
of s 129, or when a person applies to a
court for an order placing the company under supervision in terms of
s 131 (1).
[36]
The
applicant argues that the triggering event is when the s 131
application is ‘made’. In relation to when a business
rescue application has been made, the applicant referred me to
Taboo
Trading 232 (Pty) Ltd v Pro-Rec Scrap Metal and Others
[11]
,
wherein the court held that a s 131 application is made once it has
been lodged with the Registrar, issued and a copy served on
CIPC and
all affected persons. In
Blue
Star Holdings (Pty) Ltd v West Coast Oyster Growers CC
[12]
,
to which the applicant also referred me, the court adopted a slightly
more lenient formulation, holding that the application is
made when
lodged with the Registrar for issuing.
[37]
However,
the SCA ended this disparity in
Lutchman
N.O. and Others v African Global Holdings (Pty) Ltd and Others;
African Global Holdings (Pty) Ltd and Others v Lutchman
N.O. and
Others
[13]
.
The SCA endorsed the characterisation of
Taboo
of the service and notification requirements as substantive and not
merely procedural and that they are an integral part of making
an
application for an order in terms of s 131(1). Applying this
standard, the s 131 application was made at the latest by 11 May
2026, when service on all affected persons was complete.
However,
Lutchman
was decided within the realm of s 131(6), which provides for the
suspension of liquidation proceedings from the time a s131
application
is made.
[38]
Section 132(1)(b) defines the start of
business rescue proceedings as when ‘an affected person
applies
to the court’ (emphasis added). However, the meaning of
the operative term, for purposes of this matter, in s 132(1)(b)
is
‘applies’, which differs from that of ‘made’.
Lutchman
:
the SCA treated ‘applies’ in s 132(1)(b) as synonymous
with ‘made’ in s 131(6) and ‘apply’
in s
131(1), and proceeded to interpret all three phrases as carrying the
same meaning. The conclusion, then, is that issuing,
service on
the company and the CIPC and notification of affected persons apply
uniformly across all three subsections. When applied
to the facts of
this matter, it draws the ineluctable conclusion that the s 131
application had already been made by the time the
board of the first
respondent took the s 129 resolution.
[39]
The applicant argues that when the s 131
application was made, the first respondent’s board was stripped
of its powers to
pass a voluntary business rescue resolution. The
first respondent’s counsel's argument to the contrary is that
no express
provision of the Act divests the board of a company of its
powers to pass any resolutions. I could not find any provision in the
Act that expressly divests the board of its power to pass a voluntary
business rescue resolution the moment an s 131 application
has been
made, and I cannot align myself with the applicant's contention.
[40]
That is, however, not the end of the
matter. Chapter 6 of the Act creates a single, coherent system for
rescuing a company in financial
distress. The moment a s 131
application is filed, s 132(1)(b) fixes a commencement date by
operation of law. That date is no technicality,
it represents the
inception of the entire business rescue regime to the extent that the
moratorium, the practitioner’s authority,
and the rights of
creditors all flow from it. The Act does not contemplate that a board
of directors, fully aware that a court-driven
rescue process has
already been set in motion, can simply pass its own resolution to
start a parallel voluntary process with a
different commencement date
and a different practitioner of its own choosing. Two competing
business rescue processes cannot reasonably
co-exist in respect of
the same company at the same time. The coherence of Chapter 6 does
not permit it.
[41]
Even if I am wrong on the question of
whether s 129 applies to this matter, I am in any event satisfied,
for the reasons set out
below, that the resolution is invalid on
other grounds and that the application is not moot.
The filing requirement
and the CIPC Practice Note
[42]
Section 129(2)(b) of the Act provides that
a board resolution to place a company in voluntary business rescue
‘has no force
or effect until it has been filed with the
Commission.’ The word ‘filed’ is of some moment in
the context of
this matter. CIPC Practice Note 3 of 2021 was issued
in terms of regulation 4 of the Companies Regulations, 2011 (‘the
Practice
Note’), which has the status of binding subordinate
legislation. It states:
‘
The
date of filing or effective date of commencement of business rescue
proceedings will be the date the relevant information was
confirmed
as correct by a team member of the CIPC, once submitted via New
E-Services. Therefore, mere submission of the information
and
required documents, does not constitute filing. CIPC will confirm the
commencement of business rescue proceedings and the effective
date of
the proceedings, upon the issuing of a confirmation letter …’
[43]
The Practice Note provides a definition of
‘filing’ for purposes of s 129(2)(b). Mere submission to
CIPC, even if a
reference number is allocated, does not constitute
filing. Filing occurs only when a CIPC team member confirms the
documents as
correct and issues a confirmation letter. The CIPC
report generated at 13h50 on 29 May 2026, ten minutes before the
hearing commenced,
reflected the first respondent’s status as
‘IN BUSINESS’. This is objective, evidence that no filing
had occurred
as at the commencement of the hearing. The
acknowledgement of receipt uploaded during the hearing expressly
stated that ‘Your
reworked application has been successfully
received. The application awaits approval’. This was not a
confirmation of filing,
rather, it confirmed that the application had
not yet been filed. On any proper reading of the Practice Note, the
resolution therefore
had, at the commencement of argument, no force
or effect.
[44]
The CIPC Certificate of Confirmation,
eventually uploaded by the first respondent’s attorneys during
the hearing, records
an effective date of commencement of voluntary
business rescue proceedings of 29 May 2026, a date that falls after
the commencement
of these proceedings and after the Court was already
seized with the matter. This does not eliminate the question of what
consequences
flow from the s 129 process having been initiated in
these circumstances, it merely confirms that the voluntary process
was not
complete as at the commencement of the hearing.
Abuse of process
[45]
Even if I were satisfied that the voluntary
process was competent, I would still be entitled and obliged to
consider whether the
manner in which the first respondent sought to
employ that process constitutes an abuse of the process of this
Court. The relevant
facts are as follows. The board of the first
respondent had been continuously aware of the pending s 131
proceedings since 8 May
2026. The matter was postponed on 22 May
2026, on the basis that the first respondent required time to file a
proper answering
affidavit. The answering affidavit filed on 22 May
2026 contains no mention of any intention to pursue voluntary
business rescue,
and no objection to the proposed BRP. The replying
affidavit was filed on 26 May 2026. The board resolution was adopted
on 27 May
2026, two days before the hearing of the application. No
disclosure was made to the applicant or to this Court of the intended
resolution. The applicant learned of the resolution only at the
commencement of the hearing.
[46]
There is no
bona
fide
explanation for this sequence of
events. The inference is irresistible that the resolution was adopted
not as a genuine expression
of the board’s commitment to
rescuing the first respondent in line with the standards required of
a director of a company
as provided for in s 76 of the Act. Section
76 of the Act requires every director to act in good faith, for a
proper purpose, and
in the best interests of the company. To take
resolutions as a tactical manoeuvre to retain control of the business
rescue process,
specifically control over the identity of the
business rescue practitioner, and to derail the court-driven
proceedings, is not
for a proper purpose and is not in the best
interests of the company. Had the board genuinely wished to pursue
voluntary business
rescue in the interests of the company and its
creditors, it would have done so when first placed on terms by the
applicant on
28 April 2026, or genuinely wished to object against the
appointment of Mr van Greunen as interim BRP, it would have done so
in
its answering affidavit. At each of those moments, it remained
silent.
[47]
It
had been recognised in,
inter
alia
[14]
,
Panamo
Properties (Pty) Ltd and Another v Nel N.O. and Others
[15]
that
the voluntary business rescue mechanism under s 129 is susceptible to
abuse and that it is not a tactical instrument available
to directors
for purposes other than the genuine rescue of a financially
distressed company. This Court has an inherent jurisdiction
to
protect its own process from abuse. The conduct of the first
respondent’s board in this matter in deliberately withholding
the resolution until the eve of the hearing, ambushing the applicant
and this Court with documents during the hearing itself, constitutes
an abuse of process that this Court cannot countenance.
[48]
The
principle that business rescue mechanisms may not be deployed as a
tactical instrument is not novel to this Court. In
Liebenberg
and Another v Tariomix (Pty) Ltd t/a Forever Diamonds and Gold (In
Liquidation) and Others
[16]
,
Petersen J dismissed an urgent application that sought, on the basis
of a purported pending business rescue application, to interdict
provisional liquidators from performing their statutory duties and to
suspend all liquidation proceedings. The Court held that
the business
rescue application had not been properly ‘made’ within
the meaning of s 131(6) of the Act because the
service and
notification requirements of s 131(2) had not been complied with,
consistent with the standard set by the SCA in
Lutchman
.
Petersen J further found that even a properly made business rescue
application would not have suspended the powers and duties
of the
provisional liquidators, whose function of securing assets for the
benefit of the body of creditors was not among the liquidation
proceedings capable of suspension. The Court in that matter, as in
this one, was confronted with a business rescue mechanism that
had
been invoked not in genuine pursuit of the statutory objects of
rehabilitation, but as a device to obstruct proceedings already
lawfully underway. That this Court has consistently declined to
permit such conduct is a consideration that weighs in favour of
the
relief sought by the applicant in the present matter.
The declaratory relief
[49]
The question whether the resolution was
validly adopted is a live issue. It is not rendered academic by the
subsequent CIPC confirmation.
The applicant has applied, by way of an
oral application brought during argument, for a declaratory order
that the resolution of
27 May 2026 be declared a nullity.
[50]
Although
I have found that the filing of the s131 application did not
expressly divest the board of its authority to adopt a voluntary
business rescue resolution, that finding does not assist the first
respondent. The applicant is an affected person entitled in
terms of
s 130(1) to apply for an order setting aside the resolution. The
power of a court to grant such an order is set out in
s 130(5)(a),
which provides that when considering an application in terms of ss
(1)(a) to set aside the company’s resolution,
the court may set
aside the resolution on any grounds set out in subsection (1), which
grounds are not applicable in the present
application.
Alternatively, in terms of s 130(5)(a)(ii), if, having regard
to all of the evidence, a resolution may be set
aside if the court
considers that it is otherwise just and equitable to do so. It is the
latter ground upon which I rely. As the
Supreme Court of Appeal
confirmed in
Panamo
Properties
[17]
, that ground exists to
preclude litigants from exploiting the business rescue machinery to
subvert it or secure advantages not
contemplated by its purpose. On
the facts already traversed, the just and equitable onus is
satisfied.
[51]
The resolution was adopted without
disclosure, on the eve of a hearing, by a board fully aware of the
pending proceedings, for the
ulterior purpose of retaining control of
the practitioner appointment. It was not adopted in a genuine pursuit
of the objectives
of business rescue. No director who acts for such a
purpose, acts in the best interests of the company or its creditors
as required
by s 76 of the Act and it is just and equitable that the
resolution be set aside. Resultantly, I order that the resolution of
27
May 2026 is set aside. Business rescue proceedings under the s 129
process accordingly terminate by operation of s 132(2)(a)(i)
upon the
granting of this order.
[52]
The applicant proposes Mr Johan van Greunen
of Van Greunen & Associates Inc. as interim BRP. The papers
confirm,
inter alia
,
that Mr van Greunen is registered with CIPC as a senior business
rescue practitioner and has more than ten years of experience
as a
business rescue practitioner. Furthermore, he is a member in good
standing of the South African Restructuring and Insolvency
Practitioners’ Association (SARIPA) and holds a current
Fidelity Fund certificate from the Legal Practice Council.
[53]
Counsel
for the first respondent submitted in oral argument that Mr van
Greunen lacks the specialised mining-industry expertise
required for
a business rescue in a chrome mining context, and proposed the first
respondent’s preferred candidate as a more
suitable
practitioner. This submission is rejected for several reasons:
Firstly, the objection was raised for the first time in
oral argument
on the day of the hearing. It is not raised in the answering
affidavit, nor is it supported by any affidavit from
the first
respondent and to that extent, it remains a bare submission,
unsupported by any evidence. Secondly,
ex
lege
,
this Court makes only an interim appointment under s 131 of the Act.
That appointment is expressly subject to ratification by
the holders
of a majority of the independent creditors’ voting interests at
the first meeting of creditors contemplated in
s 147 of the Act. The
creditors, as a body, not the company's board, have the ultimate say
on the practitioner’s continued
appointment. As was held in
Swart
v Beagles Run Investments 25 (Pty) Ltd and Others
[18]
that where there are differences of opinion between the company and
its creditors in business rescue proceedings, the interests
of the
creditors should carry the day. The board’s preferred choice of
practitioner is not a relevant consideration at this
stage. Thirdly,
in the particular circumstances of this matter, where the very
motivation for the first respondent’s last-minute
voluntary
resolution appears to have been to install a practitioner of its own
choosing, this Court is especially disinclined to
favour the board’s
preferred candidate over the qualified and consenting practitioner
properly proposed by the applicant.
[54]
I am satisfied that Mr van Greunen meets
all requirements of s 138 of the Act and that his appointment as
interim BRP is appropriate.
Costs
[55]
I have already remarked on the conduct of
the first respondent’s board in these proceedings and I do not
propose to repeat
those observations. It suffices to say that the
conduct traversed above in ordinary circumstances warrants a punitive
costs order
as between attorney and client. The difficulty, however,
is practical as the first respondent has been placed in business
rescue.
A punitive costs order against it would rank as a
pre-commencement claim against a financially distressed estate that
is already
unable to meet its existing obligations, chief among them
the applicant’s own acknowledged substantial debt. Such an
order
would be an empty gesture that affords the applicant no
meaningful protection beyond that which it already enjoys as a
creditor
of the estate. I accordingly make no punitive costs order,
not because the conduct does not deserve one, but because the
circumstances
render it without practical consequence. The costs of
this application should be costs in the business rescue.
Order
[56]
In the result, the following order is made:
1.
The application is heard as one of urgency
in terms of Rule 6(12) of the Uniform Rules of Court and
non-compliance with the normal
time periods is condoned.
2.
The first respondent is hereby placed under
supervision and business rescue proceedings in respect of the first
respondent are hereby
commenced in terms of section 131(4)(a) read
with
section 131(1)
of the
Companies Act 71 of 2008
, with effect from
11 May 2026.
3.
Mr Johan van Greunen of Van Greunen &
Associates Inc., Attorneys (registration number 2013/194117/21), is
hereby appointed as
the interim business rescue practitioner of the
first respondent in terms of
section 131(5)
of the Act, with all
powers and duties contemplated in Chapter 6 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.
4.
The resolution adopted by the board of
directors of the first respondent on 27 May 2026 purporting to place
the first respondent
in voluntary business rescue in terms of
section
129
of the Act is set aside.
5.
The costs of this application are costs in
the business rescue.
M
WESSELS
ACTING
JUDGE OF THE HIGH COURT
NORTH
WEST DIVISION, MAHIKENG
Appearances
For
applicant
:
Adv
H Scholtz
Instructed
by
:
Wessels
Botha Stoltz Inc
:Pretoria
:c/o
LFS Attorneys
:Mahikeng
For
first respondent
:
Adv
J Raubenheimer
Instructed
by
:
Malapane
Attorneys Inc.
:c/o
Lehabe Attorneys
Mahikeng
[1]
Companies
Act 71 of 2008
.
[2]
Mine
Health and Safety Act 29 of 1996
.
[3]
Koen
and Another v Wedgewood Village Golf & Country Estate (Pty) Ltd
and Others
2012 (2) SA 378
(WCC) para 10.
[4]
Sibakhulu
Construction (Pty) Ltd v Wedgewood Village Golf Country Estate
(Pty)
Ltd
[2011] ZAWCHC 439
para 23.
[5]
Mine
Health and Safety Act 29 of 1996
.
[6]
Oakdene
Square Properties (Pty) Ltd and Others v Farm Bothasfontein
(Kyalami) (Pty) Ltd and Others
2013 (4) SA 539
(SCA) para 29.
[7]
Newcity
Group (Pty) Limited v Pellow N.O. and Others
[2014] ZASCA 162
para 15.
[8]
Ibid
fn5, para 16.
[9]
Mineral
and Petroleum Resources Development Act 28 of 2002
.
[10]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA)
.
[11]
Taboo
Trading 232 (Pty) Ltd v Pro-Rec Scrap Metal and Others
2013
(6) SA 141 (KZN).
[12]
Blue
Star Holdings (Pty) Ltd v West Coast Oyster Growers CC
2013 (6) SA 540 (WCC).
[13]
Lutchman
N.O. and Others v African Global Holdings (Pty) Ltd and Others;
African Global Holdings (Pty) Ltd and Others v Lutchman
N.O. and
Others
2022
(4) SA 529
(SCA) para 39.
[14]
See
Lutchman
supra
.
[15]
Panamo
Properties (Pty) Ltd and Anotherv Nel N.O. and Others
[2015]
ZASCA 76
; 2015 (5) SA63 (SCA) para 34.
[16]
Liebenberg
and Another v Tariomix (Pty) Ltd t/a Forever Diamonds and Gold (In
Liquidation) and Others
[2024]
ZANWHC 166.
[17]
Ibid
fn 15 para 34.
[18]
Swart
v Beagles Run Investments 25 (Pty) Ltd and Others
2011
(5) SA 422
(GNP) para 41.