Are there (still) more questions than answers in business rescue proceedings? Prof Anneli Loubser

Non-compliance with section 129(3) and (4) Section 129(3): Within 5 business days after filing resolution –Publish notice of resolution to every affected person and –appoint business rescue practitioner Section 129(4): File notice of appointment of business rescue practitioner within 2 business days after appointment and Publish a copy of such notice within 5 days after filing Section 129(5): Non-compliance: resolution lapses and is a nullity, 3 months embargo

Business rescue resolution Advanced Technologies and Engineering Company (Pty) Ltd (in business rescue) v Aeronautique et Technologies Embarquées SAS (GNP, Case no 72522/2011) –business rescue practitioner not appointed within 5 business days after filing resolution (s 129(3)) –resolution automatically lapses and is a nullity: no condonation or substantial compliance possible Followed in Madodza (Pty) Ltd (in business rescue) v ABSA Bank Limited (GNP, Case No 38906/2012) –also practitioner not appointed within 5 days Non-compliance with procedural requirements

Ex parte Van den Steen NO & South Gold Exploration (Pty) Ltd (3624/2013 GSJ) –failure to notify some creditors about resolution –section 6(9) allows substantial compliance with prescribed manner of delivery of notice –declaratory order issued that resolution is valid, not condonation order

Section 131(4): Court may make an order placing company under supervision and commencing business rescue proceedings Section 132 (1)(b): BR begins when an affected person applies to court for an order placing the company under supervision –S 348 of 1973 Act: liquidation commences at time of presentation to court of application = filing of application with Registrar of the court Time of commencement by court order

Investec Bank Ltd v Andre Bruyns (WCC, Case no 19449/11): “ The answer to this question is not free from difficulty. It is an important one that will no doubt have to be decided in due course by our courts. When that question arises for decision it will also need to be considered whether -if business rescue proceedings are indeed found to commence at the date of the launching of the application - the said result ensues forthwith on the launching of the application or only retrospectively after the making of a court order.”

Application for BR during liquidation S 131(6): If liquidation proceedings have already been commenced by or against the company at the time an application is made for an order placing the company under supervision and commencing business rescue proceedings, the application will suspend those liquidation proceedings until court refuses BR or BR proceedings end. Section 131(7): During the course of liquidation proceedings or proceedings to enforce any security against the company, court may order business rescue

Application for BR during liquidation Opportunity for abuse: Cohen v Newcity Group (Proprietary) Limited (GSP, Case No 45670/2011; 28615/2011) –sole aim was to block liquidation, no intention to rescue

Application for BR during liquidation Van Staden v Angel OzoneProducts CC (In liquidation) and Others [2012] ZAGPPHC 328 –even after final liquidation order has been issued, until final L&D account is approved Cardinet (Proprietary) Limited v Wedgewood Golf and Country Estates (Pty) Ltd (in liquidation) (WCC Case no 19599/2012) –Business rescue order issued almost a year after final liquidation order

Uncompleted contracts Original version of s 136(2): practitioner may cancel or suspend entirely, partially or conditionally any provision of an agreement to which the company was a party at commencement of BR Amended: practitioner may suspend any obligation that would otherwise become due during proceedings Inserted: S 136(2A)(c) - if practitioner suspends a provision relating to security granted by the company……