Richter v Absa Bank Limited

Bloempro CC was placed under final liquidation by the Free State High Court in September 2012. Despite this, Dawid Jacques Richter, an employee and general manager of Bloempro CC, later applied in the Gauteng Division of the High Court for an order placing the company under business rescue in terms of s 131 of the Companies Act 71 of 2008. Absa Bank Limited, a creditor, intervened and opposed the application, contending that business rescue was incompetent after a final liquidation order. A default order was granted dismissing the business rescue application. Richter then applied for rescission of that default judgment. The High Court dismissed the rescission application on the basis that business rescue could not be sought once final liquidation had been ordered. Richter appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the High Court was set aside and the matter was remitted to the court a quo to determine the application for rescission of judgment.

This case authoritatively clarified that business rescue proceedings may be commenced even after a final liquidation order has been granted. It affirmed a purposive interpretation of the Companies Act, strengthening the flexibility and remedial scope of business rescue and aligning South African law with the Act’s objective of rescuing financially distressed companies for the benefit of a broader group of stakeholders.