S P Lenong Civil Group 8 (Pty) Ltd v ABSA Bank Limited and Others

ABSA Bank Limited, a major creditor, successfully applied for an order setting aside New Biginnings Projects CC’s resolution to place itself under voluntary business rescue and for the provisional winding-up of the close corporation. The applicant, S P Lenong Civil Group 8 (Pty) Ltd, a creditor owed approximately R15.5 million, was not directly notified of ABSA’s winding-up application. ABSA had instead emailed the papers to attorneys who previously acted for the applicant but who no longer held a mandate. The applicant brought an urgent application under section 354(1) of the Companies Act 61 of 1973 to set aside the provisional liquidation order, alleging lack of proper notice and asserting that New Biginnings could be financially rehabilitated through various construction contracts, with the applicant providing funding and machinery.

The application to set aside the provisional winding-up order was dismissed. The applicant was ordered to pay ABSA Bank Limited’s costs, including the costs of two counsel where employed.

The case reaffirms the strict requirements for setting aside winding-up proceedings under section 354(1) of the Companies Act 61 of 1973 and underscores that procedural defects such as inadequate notice will not, on their own, justify such relief. It highlights the primacy of creditor interests and the heavy onus on an applicant to prove that setting aside liquidation would not prejudice the concursus creditorum, especially in the context of speculative business rescue prospects.