2022/11/02
Start: register
Raise money
Run the business Run into trouble End: deregister
Incorporators Shareholders (equity) Directors
MOI
Creditors (debt)
Business rescue
practitioner
Winding-up
Liquidate
Business rescue plan
2008 Act
1973 Act
Sch 5 It 9
Ch 14
S 339
Insolvency
Act
1
2022/11/02
Legal frameworks
Business rescue ito
ch 6
Company ito s 1 of
the 2008 CA
Compromise ito
s 115
Liquidation (but …)
Who is the
insolvent?
Debtor ito s 2 of
the IA
Sequestration
IA point of
departure
Other e.g. bank or
insurance company
Legal frameworks
2008
CA
• Repealed
1973 CA
• Transitional
measures
2008
CA
• Schedule 5
• Item 9
1973
Act
• Ch 14
• As if CA not
repealed
• Which
companies?
2
2022/11/02
Legal frameworks
1973 CA
• Unable to
pay debts
• Applicable to
companies
• No guidance
in 1973 CA
Law of
insolvency
• Mutatis
mutandis
• S 339
Law of
insolvency
• Other
provisions
• 1973 CA
What does this mean?
• Boschpoort Ondernemings (Pty) Ltd v Absa Bank Limited (936/2012) [2013]
ZASCA 173; [2014] 1 All SA 507 (SCA); 2014 (2) SA 518 (SCA) (28 November 2013)
• Par 22
• “Consequently, in order for a solvent company to be wound-up in terms of either
s 80 or 81 of the new Act, it must be commercially solvent. If it is commercially
insolvent it may be wound-up in accordance with chapter 14 of the old Act, as is
provided for in subitem 9(i) of schedule 5 of the new Act.”
3
2022/11/02
Winding up a company
Decision by the shareholders
(special resolution)
Called = creditors’ voluntary winding-up if
insolvent and insolvency route/rules
followed (creditors play large role because
their interests are at stake. Creditors call
the shots just like with sequestration eg
creditor meetings and nomination of the
liquidator)
Called = members’ voluntary winding-up
if solvent and normal company
route/rules followed (creditors do not
play large role because their interests are
not at stake = solvent means enough
money to pay. Members call the shots eg
appoint liquidator)
Court
application +
court order
Application + affidavit
See textbook for grounds to wind-up
solvent company (2008 Act)
See next slide for grounds to wind-up
insolvency company (1973 Act)
Section 346: who can apply to have a company unable to
pay its debts (commercially insolvent) wound up
“346 Application for winding-up of company
(1) An application to the Court for the winding-up of a company may, subject to
the provisions of this section, be made
(a) by the company;
(b) by one or more of its creditors (including contingent or prospective creditors);
(c) by one or more of its members (now called shareholders), or any person
referred to in section 103 (3), irrespective of whether his name has been
entered in the register of members or not;
(d) jointly by any or all of the parties mentioned in paragraphs (a), (b) and (c);
(e) in the case of any company being wound up voluntarily, by the Master or any
creditor or member of that company”
4
2022/11/02
Section 344(a), (f), (h): basis for application
• Section 344
• (a) members’ resolution (shareholders decided)
• (f) unable to pay its debts (section 345 also)
• (h) just and equitable BUT under circumstances of insolvency
• Section 345
• “A company (or body corporate) shall in terms of section 345 read with section 344(f) be
deemed to be unable to pay its debts if: … a creditor to whom the company is indebted
in a sum of not less than R100 then due, has served on the company a demand requiring
the company to pay the sum so due and the company or body corporate has for three
weeks thereafter neglected to pay the sum or to secure or compound for it to the
reasonable satisfaction of the creditor; or … any process issued on a judgment, decree or
order of any court in favour of a creditor of the company is returned by the sheriff or the
messenger with an endorsement that there is not sufficient disposable property to
satisfy the judgment or that any disposable property found did not upon sale satisfy such
process; or … it is otherwise proved to the satisfaction of the Court that the company is
unable to pay its debts.”
5