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Most recent Insolvency Law Articles posted
After driving Optimum Coal into business rescue last year, thereby endangering almost 2 000 jobs at the mine, Eskom suddenly reached a settlement that gave the Gupta family a 75% discount on the R2.1bn fine it had levied on the company at the time it was owned by global commodities trader Glencore. Business Day says in March this year, Eskom agreed to accept a R500m settlement for the non-performance penalties it had levied on Glencore.
A 100% black-owned Port Elizabeth construction company faces liquidation, with the resultant loss of 300 jobs, following claims that the Nelson Mandela Bay Municipality owes it R117m. The Herald reports the Eastern Cape High Court (Port Elizabeth) has provisionally wound up Masakeni Construction (Pty) Ltd, ordering a commission of inquiry in terms of the Companies Act.
Rockwell Diamonds – suspended from trade in Johannesburg and Toronto – has filed for business rescue to stave off attempts by a contractor to liquidate the company, says a BusinessLIVE report. Rockwell had an interim liquidation order awarded against it in March by the Northern Cape High Court (Kimberley) after which it applied for trade in its shares to be suspended.
The Gauteng High Court (Johannesburg) this week placed the estates of personal injury lawyers Ronald and Darren Bobroff under provisional sequestration, according to a report by investigative journalist Tony Beamish on the Moneyweb site. It notes the father and son duo are fugitives from justice who fled to Australia last March when the Hawks requested that they hand themselves over to be arrested.
SARS cannot prevent a liquidator from taking possession of property by virtue of the fact that the duty and VAT of the property has not been paid, says Virusha Subban, Claire van Zuylen and Yue Li, of Bowmans, in an analysis on the Polity site. They examine the recent SCA judgment in CSARS v Van der Merwe NO, where it was held that a liquidator is entitled to take the possession of the property in terms of the Insolvency Act, even though the duty and VAT of the property has not been paid to SARS.
When you are struggling to recover your money from a recalcitrant debtor company, applying for its liquidation can be a very powerful collection tool. Suddenly the directors are faced with the imminent prospect of completely losing control of their company, its business and its assets to a liquidator. If the directors are just fighting a rearguard action to delay paying you, a liquidation (or “winding-up”) application should immediately focus their minds on finding a way to settle the debt.
An allegedly bogus lawyer has been accused of forgery as he attempts to hang onto his houses and cars, avoid sequestration and save his career, says a Sunday Times report. Patel Muhamed, also known as Mohamed Ismail Patel, said in court papers his wife, Fatima, had ‘received her Islamic divorce (from me) according to Sharia law’ through the Majlisush Shura al Islami council in Cape Town.
Entrepreneur and pastor Lonwabo Mahlati is R43m down on his fortune after the Eastern Cape High Court (East London) granted summary judgment against him. Judge John Smith said there seemed little doubt that Mahlati and his wife had misappropriated the money from the business’ liquidation account.
Embattled Western Province Rugby (Pty) Ltd was finally liquidated in the Western Cape High Court on 20 December… but the commercial partner in a major dispute with them has vowed that ‘the fight won’t end here’, notes a Sport24 report. Judge Dennis Davis, on behalf of Judge Ashley Binns-Ward, gave the final liquidation ruling after Binns-Ward reserved judgment. It was ordered that WP Rugby (Pty) Ltd – the business wing of the WP Rugby Union – not proceed with any contracts and that the company’s property be sold by public auction, public tender or private contract.
The SCA has found a racial quota policy implemented for the appointment of liquidators to be unlawful and invalid. It ruled on Friday that an appeal against a finding of its unconstitutionality be ‘dismissed with costs,’ upholding the High Court’s finding of the policy as ‘unconstitutional and irrational’ as well as ‘unlawful and invalid’, notes a News24 report.
What comfort does our law offer to a massively over-indebted person without a job or assets? None, according to Paul Esselaar, consumer law attorney and owner of Esselaar Attorneys. In an article on the Legalbrief Today site he examines the three tools available to over-indebted people: administration orders, debt review and sequestration.
Allegations that Western Province Rugby (WPR) faked bankruptcy for ulterior motives have emerged in an urgent application at the Western Cape High Court which one of its partners lodged last week, says a Weekend Argus report. WPR was provisionally wound up a week ago amid claims that it suffered an operating loss of more than R12m in the 2015 financial year, that its overdraft facility with its bank was as high as R19m and that it was left without funds to cover operating expenses.
Western Cape High Court Judge Robert Henney yesterday granted a final order for the liquidation of the Beyers Realty Group after millions disappeared from the company’s trust account. A Cape Times report says the company had been placed in provisional liquidation on 4 October. Both Beyers Swanepoel-Trollip and his husband and business partner, Lenard Swanepoel-Trollip, who were 50/50 partners in the real estate firm, have absconded and are believed to be in Australia with their 11-month-old daughter.
The Gupta family may lose its recently-acquired Optimum Coal Mine. An eNCA report says multinational company Barloworld Equipment is threatening the mine with liquidation, claiming it is owed money for goods and services. A statement issued by Barloworld Equipment confirms that it has applied to a High Court for the liquidation of Optimum Coal Mine, which the Gupta family recently purchased.
The Gauteng High Court (Pretoria) has ordered that sequestration proceedings begin against the former directors of Aurora Empowerment systems for mismanagement of Pamodzi Gold mines, says a BDlive report. The decision brings some closure to thousands of mineworkers who lost their jobs, trade union Solidarity said. A deal had also been reached with Khulubuse Zuma for the payment of R23m in damages to the Pamodzi and Aurora liquidators, the union said.
Since the “new” 2008 Companies Act came into effect in 2011, directors and other company officers have had to shoulder a raft of additional responsibilities and risks, amongst them a significantly increased risk of personal liability. Consider for example the little-known section 218(2) which waits in ambush for the unwary in the “Miscellaneous Matters” section at the tail-end of the Act.
Lawyers for a creditor owed â‚¬1.3m (R19.6m) by Ellies subsidiary Megatron claim Fridayâ€™s voluntary business rescue announcement released via Sens was â€˜null and voidâ€™, says a BDlive report. Law firm Hogan Lovells â€“ acting on behalf of creditor Ormazabal International Business â€“ said its High Court application on 19 July to have Megatron placed into business rescue or under liquidation had priority.
The professional arm of the unionâ€š EP Rugby (Pty) Ltdâ€š went into liquidation after months of financial strife in the Eastern Cape High Court (Port Elizabeth) yesterday. A Sport24 report says the cash-strapped EPRU was placed under provisional liquidation on 10 March after failing to resolve its ongoing financial problems, which has seen the union unable to pay playersâ€™ salaries.
In a judgment that damned Parliament for its failure to facilitate public participation in its legislative process, the Constitutional Court yesterday (Thursday) declared invalid in its entirety the Restitution of Land Rights Amendment Act, notes Legalbrief. ‘The NCOP public participation process was unreasonable and thus constitutionally invalid‚’ Judge Mbuyiseli Madlanga found in a unanimous judgment. According to a TimesLIVE report, the court pointed out that provinces gave out notices just days before hearings‚ which were held only in certain municipalities and excluded many of those affected.
The Western Cape High Court has blown the lid off a practice which sees attorneys charge hefty fees to lodge batches of standardised, unopposed voluntary surrender (forced sequestration) applications in instances where they could have offered better solutions to their debt-ridden clients, says a report in The Sunday Independent. Judge Lee Bozalek estimated that one firm must have been taking around 80 applications a month to court. ‘The same valuator and the same method of valuation has been utilised in each case, and more than adequate provision has been made for the attorneys’ fee, including minor disbursements, in amounts ranging between R14 000 and R15 000,’ he said. He expressed his concerns in a recent judgment handed down in several separately-lodged applications for volun tary surrender, but it wasn’t the first time he had raised the issue. ‘Very little, it seems to me, if anything, has changed, and these applications are still being brought in significant numbers,’ he said. The Debt Counsellors Association of SA described the practice as an exploitation of the Sequestration Act. Association president Paul Slot said sequestrations were costly, and not the best option for consumers with small amounts of debt and no major assets.There are three options open to consumers who find themselves trapped in debt – sequestration, administration and debt review. The best option was debt review, although it was the one used the least.