Van Zyl & another v Off the Shelf Investments Seventy Eight (Pty) Ltd

The appellants, acting as liquidators of Cinmark Twelve (Pty) Ltd, applied for the provisional liquidation of Off the Shelf Investments Seventy Eight (Pty) Ltd. Cinmark and the respondent were subsidiaries of a Luxembourg holding company, Skipness Société Anonyme. Cinmark had expended R11 907 092 to develop a wine cellar permanently attached to the respondent’s wine farm. The respondent’s audited financial statements for 2014 and 2015 reflected this amount as a loan owed to Cinmark. After Cinmark was finally liquidated at the instance of a creditor, the appellants demanded repayment of the loan from the respondent. The respondent resisted liquidation, contending that the loan reflected in its financial statements was merely an erroneous accounting entry and that no real indebtedness existed.

The appeal was upheld. The order of the High Court was set aside and replaced with an order placing the respondent under provisional winding-up, issuing a rule nisi calling for reasons why a final winding-up order should not be granted, and directing service of the order on creditors, employees, SARS, and by publication.

The case affirms the evidentiary weight of audited and approved financial statements in liquidation proceedings and clarifies that internal group accounting explanations cannot easily displace recorded loan liabilities. It reinforces principles governing provisional liquidation, commercial insolvency, and the application of Chapter 14 of the Companies Act 61 of 1973 under the transitional regime of the Companies Act 71 of 2008.