SA Airlink (Pty) Ltd v South African Airways (SOC) Limited (in Business Rescue) and Others

SA Airlink (Pty) Ltd (Airlink) and South African Airways (SOC) Limited (SAA) had a business alliance for almost 20 years, regulated by an Alliance Agreement and operational agreements including a Commercial Agreement. Under these agreements, SAA sold Airlink tickets through its booking platforms and collected revenue on Airlink's behalf, which it was obliged to remit periodically after deducting commissions and fees. On 5 December 2019, SAA was placed under business rescue under s 131(4)(a) of the Companies Act 71 of 2008, with business rescue practitioners appointed. Prior to the business rescue commencement, SAA had received ticket sales revenue for Airlink for the period November 2019 to early December 2019 (the pre-commencement revenue). After business rescue commenced, SAA refused to pay this revenue to Airlink, contending it was a pre-commencement debt. Airlink rejected this position and on 17 January 2020 launched an urgent application in the Gauteng High Court seeking payment of the November-early December revenue and other amounts. The High Court dismissed the application, finding the revenue constituted a debt owed by SAA and that Airlink had not made out a case for lifting the moratorium on legal proceedings imposed by s 133(1) of the Act. Airlink appealed with leave of the High Court.

• Whether revenue received by SAA for Airlink ticket sales constituted property held by SAA as Airlink's agent, or a debt owed to Airlink
• Whether the moratorium on legal proceedings against companies in business rescue under s 133(1) of the Companies Act 71 of 2008 applied to bar Airlink's claim
• Whether the debt, if any, was a pre-commencement or post-commencement debt in relation to the business rescue proceedings
• Whether SAA's election to abide by the Alliance Agreement precluded it from relying on the s 133(1) moratorium

The appeal was dismissed with costs, including costs of two counsel.

The ratio decidendi is that: (1) The moratorium under s 133(1) of the Companies Act 71 of 2008 applies to all legal proceedings against a company in business rescue, subject only to the limited exceptions in s 133(1)(a)-(f), regardless of whether the cause of action arose before or after commencement of business rescue. (2) Revenue received by a company under a contractual arrangement and held in the company's bank accounts constitutes a debt owed by that company, not property held as agent, unless there is an express contractual provision creating an agency relationship and the company deals with the funds separately as trust property. (3) A debt is "owed" for purposes of s 154(2) of the Act from the time the obligation to pay arises, not from when payment becomes due and enforceable. (4) Legal proceedings may only be brought against a company in business rescue with the written consent of the business rescue practitioner or leave of the court under s 133(1)(b), and a party must establish proper grounds for such leave.

The Court made obiter observations on the factors relevant to determining whether it is appropriate to lift the moratorium under s 133(1)(b), citing Arendse v Van der Merwe: (a) the effect that granting or refusing leave would have on the applicant's rights versus other affected persons and stakeholders; (b) the impact the proposed legal proceedings would have on the wellbeing of the company and its ability to regain financial health; and (c) whether granting leave would be inimical to the object and purpose of business rescue as set out in ss 7(k) and 128(b) of the Act. The Court also noted obiter that the moratorium applies even to proceedings before arbitral tribunals, citing Shamla Chetty t/a Nationwide Electrical v Hart NO. The Court observed that the relationship between SAA and Airlink was one of "mutual support" rather than principal-agent or debtor-creditor in the traditional sense, though ultimately the revenue constituted a debt.

This case clarifies the scope and application of the moratorium on legal proceedings under s 133(1) of the Companies Act 71 of 2008 during business rescue. It confirms that the moratorium applies broadly to all legal proceedings against a company in business rescue, regardless of whether the cause of action arose before or after commencement of business rescue proceedings. The decision provides important guidance on the distinction between property held by a company as agent (which would not be subject to the moratorium) versus debts owed by the company (which are subject to the moratorium and potential compromise under a business rescue plan). It emphasizes that the moratorium is essential to the effectiveness of business rescue by providing the necessary breathing space for restructuring. The judgment also clarifies that a debt is "owed" for purposes of s 154(2) from the time the obligation arises, not from when it becomes due and payable. This case is significant for creditors seeking to recover moneys from companies in business rescue and confirms the primacy of business rescue protections over individual creditor claims.