Ragavan and Others v Optimum Coal Terminal (Pty) Ltd and Others

Tegeta Exploration and Resources (Pty) Ltd and its wholly owned subsidiary, Optimum Coal Terminal (Pty) Ltd (OCT), were both placed under voluntary business rescue in February 2018. Tegeta was a creditor of OCT. In October 2021, the business rescue practitioners of OCT published a business rescue plan and convened a meeting for affected persons to vote on the plan. A dispute arose between Tegeta’s board of directors and Tegeta’s business rescue practitioners as to who was entitled to exercise Tegeta’s voting rights as a creditor of OCT. The directors claimed the right to vote, while the practitioners asserted that the voting right vested in them. The High Court interdicted the meeting pending determination of the issue and held that the practitioners had the right to vote. The directors appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel, in favour of the first, second, third, fifth, sixth and seventh respondents and Liberty Energy (Pty) Ltd.

The judgment clarifies the allocation of powers between directors and business rescue practitioners under Chapter 6 of the Companies Act, specifically confirming that practitioners exercise creditor voting rights where the company is itself in business rescue. It provides authoritative guidance on the meaning of ‘full management control’ and resolves uncertainty in complex group business rescue scenarios involving inter-company debts.