Validity of business rescue process in question
The business rescue process is under constitutional attack by creditors of the Optimum Coal Mine who want the company liquidated, notes Rapport.
The Gauteng High Court (Pretoria) is being asked to consider the constitutionality of the wide powers in the Companies Act given to business rescue practitioners to decide which claims are valid and how the different claims should be dealt with.
Westdawn Investments, an Optimum creditor, argues that the business rescue regime is unconstitutional as it allows business rescue practitioner to favour one creditor over another and the same checks and balances applicable to insolvency proceedings are not applicable to business rescue proceedings.
Chavonnes Cooper, an insolvency practitioner at CK Trust, says in an affidavit in support of the application that the issue is pertinent as the business rescue practitioner effectively decides the creditors, how big their claims are and therefore what voting power they have on the proposed business rescue plan.
The only option left to aggrieved creditors whose claims are adjusted or qualified by a practitioner is to approach the courts, Cooper says.
Westdawn wants Optimum liquidated.
It claims that the business rescue practitioners are favouring Eskom and Centaur as large creditors to the detriment of smaller creditors.
The Optimum business rescue process has been ongoing for two years, notes the report.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
