Murray and Others NNO v African Global Holdings (Pty) Ltd and Others

The Bosasa Group of companies faced catastrophic reputational damage following evidence at the Zondo Commission. FNB and ABSA withdrew banking facilities, leaving the Group unable to conduct banking transactions. The Group consulted a business rescue practitioner who could not secure banking facilities. On legal advice, the directors of African Global Holdings (Pty) Ltd resolved to place its subsidiary Operations and Operations' subsidiaries into creditors' voluntary winding-up under s 351 of the Companies Act 61 of 1973. Resolutions were filed with CIPC on 14 February 2019. The Deputy Master in Pretoria appointed Messrs Murray and Lutchman as provisional liquidators. Mr Murray took vigorous control of the premises. Holdings then obtained legal advice that the resolutions were defective and launched urgent proceedings on 4 March 2019 seeking to set aside the resolutions and liquidators' appointments, claiming the companies were solvent and should have been wound up under ss 79-80 of the Companies Act 71 of 2008. The high court granted the relief and ordered the liquidators to pay costs personally. The liquidators appealed.

• Whether the companies were solvent companies that could only be wound up under ss 79-80 of the Companies Act 71 of 2008 rather than s 351 of the Companies Act 61 of 1973
• Whether the companies were commercially insolvent
• Whether the Deputy Master in Pretoria had jurisdiction to appoint liquidators when the companies' registered offices were in the jurisdiction of the Master in Johannesburg
• Whether the matter warranted urgent treatment
• Whether personal costs orders against liquidators were justified

The appeal was upheld with costs, including costs of two counsel. The high court order was altered to dismiss the application with costs, including costs of two counsel.

A company is commercially insolvent when it is unable to meet its current liabilities, including contingent and prospective liabilities, as they fall due in the ordinary course of business, regardless of whether its assets exceed its liabilities. The test is whether the company has liquid assets or readily realisable assets available to meet its liabilities and continue normal trading. A company without access to banking facilities and unable to pay debts as they fall due is commercially insolvent. Commercially insolvent companies must be wound up under the Companies Act 61 of 1973 and cannot be wound up under ss 79-80 of the Companies Act 71 of 2008, which apply only to solvent companies. The Master at the main seat of a High Court division exercises jurisdiction throughout the entire province, including areas where there are local seats with their own Masters. Personal costs orders against liquidators and other officers of the court require evidence of actual impropriety, not speculation or insinuation.

The court observed that under the Public Finance Management Act 1 of 1999, government departments and entities must make payments through conventional banking systems, making it impossible for companies without banking facilities to receive payments from government clients. The court commented on the inappropriate haste with which the high court dealt with the matter when urgency had been created by the applicant's own delay. The court criticized the high court's failure to consider a detailed report filed by the liquidator at the Master's request, noting that such reports are properly part of the record without need for an application under Uniform Rule 6(5)(e) when filed at the instance of the supervising Master. The judgment contains strong criticism of unfounded insinuations by the high court that liquidators were motivated by financial self-interest, describing such insinuations as "verging on the defamatory" and emphasizing that such orders should not be sought or granted on such a basis.

This case provides authoritative guidance on commercial insolvency in South African company law, clarifying that solvency under the Companies Act 71 of 2008 means commercial solvency, not merely that assets exceed liabilities. It established that a company unable to access liquid assets or banking facilities to pay debts as they fall due is commercially insolvent, regardless of its asset position. The judgment clarifies the jurisdictional reach of Masters' offices in relation to the restructured High Court divisions after the Superior Courts Act 10 of 2013. It also provides important guidance on when personal costs orders may be made against liquidators and officers of the court, emphasizing that such orders require evidence of actual impropriety, not mere speculation or insinuation. The case demonstrates the continued interplay between the Companies Act 61 of 1973 and Companies Act 71 of 2008 in relation to winding-up procedures.