Pick ‘n Pay Retailers (Pty) Ltd v Ramalho NO and Another

Lashka 167 (Pty) Ltd, a Pick ‘n Pay franchisee, sold its business to a third party, Enthrall Trading (Pty) Ltd, for R25 million while in financial distress. The purchase price was paid into the trust account of White & Case Attorneys under a sale agreement that regulated how the funds would be distributed to creditors, including Pick ‘n Pay and First National Bank (FNB). Lashka was finally liquidated on 19 February 2018. Before liquidation, FNB was paid in full, but no payment instruction was issued to pay Pick ‘n Pay. After liquidation, Pick ‘n Pay invoked clause 6 of the sale agreement, signed the payment instruction itself, and received R21.6 million from the trust account in July 2019. The liquidators sought repayment, contending that the payment was unlawful as it was made after liquidation in disregard of the concursus creditorum.

The appeal was dismissed with costs, including the costs of two counsel. Pick ‘n Pay was ordered to repay the amount received to the liquidators.

The judgment reaffirms the centrality of the concursus creditorum in South African insolvency law and clarifies that contractual payment mechanisms and mandates cannot be enforced after liquidation to secure preferential payment. It underscores that third-party trust arrangements do not circumvent insolvency principles once liquidation supervenes.