FirstRand Bank Limited v Normandie Restaurants Investments (Pty) Ltd and Another

Normandie Restaurants Investments (Pty) Ltd, a property-owning company whose sole income was rental from a single commercial property in Rondebosch, fell into financial distress after its tenant vacated in 2013. It defaulted on its obligations to FirstRand Bank Limited and other creditors, including SARS and the City of Cape Town. After further defaults under a subsequent lease with a new tenant (Warthog Pub (Pty) Ltd), the Bank applied for Normandie’s winding-up under the Companies Act 61 of 1973. In response, Mr Dimitri Philippou, a director, applied for business rescue under s 131 of the Companies Act 71 of 2008, alleging reasonable prospects of rescue based mainly on anticipated rental income and proposed post-commencement finance. The High Court granted business rescue and dismissed the liquidation application. The Bank appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order was set aside. The application for business rescue was dismissed with costs, and Normandie Restaurants Investments (Pty) Ltd was placed under final winding-up with costs.

This case is a leading Supreme Court of Appeal authority on the interpretation of ‘reasonable prospects’ for business rescue under the Companies Act 71 of 2008. It reinforces that business rescue is not a mechanism to delay liquidation and that courts must prioritise the interests of creditors where rescue prospects are speculative or unsubstantiated. The judgment builds on Oakdene Square Properties and clarifies evidentiary requirements in business rescue applications.