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ito s 2 of the IA Sequestration IA point of departure Other e.g. bank or insurance company Legal frameworks 2008 CA • Repealed 1973 CA • Transitional measures 2008 CA • Schedule 5 • Item 9 1973 Act • Ch 14 • As if CA not repealed • Which companies? 2 2022/11/02 Legal frameworks 1973 CA • Unable to pay debts • Applicable to companies • No guidance in 1973 CA Law of insolvency • Mutatis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