Mashwayi Projects (Pty) Ltd and Others v Wescoal Mining (Pty) Ltd and Others

Arnot Opco (Pty) Ltd, owner of the Arnot coal mine, was placed under business rescue in October 2022. A meeting of creditors was convened on 28 July 2023 under s 151 of the Companies Act 71 of 2008 to vote on a proposed business rescue plan. The plan afforded voting rights to both pre- and post-commencement creditors and proposed several options, including the sale of the business as a going concern (Option B). Wescoal Mining (Pty) Ltd and its holding company supported Option B and the offer by Ndalamo Coal (Pty) Ltd. Mashwayi Projects (Pty) Ltd, a post-commencement creditor and cessionary of other claims, voted against the plan. Initially, the practitioner declared the plan adopted, but a subsequent forensic audit revealed voting irregularities which, when corrected, showed that less than the required 75% voting threshold had been met. The practitioner then indicated that the plan had not been validly adopted. Wescoal and related parties approached the High Court, which held that post-commencement creditors were not entitled to vote and that, excluding Mashwayi’s vote, the plan had been validly adopted. Mashwayi, Arnot and the business rescue practitioner appealed to the Supreme Court of Appeal.

The appeals were upheld with costs. The High Court’s order was set aside and replaced with an order declaring that the amended business rescue plan was not supported by more than 75% of creditors’ voting interests as required by s 152(2) of the Companies Act and was accordingly rejected in terms of s 152(3)(a). Related applications and counter-applications were dismissed with costs.

This judgment authoritatively clarifies that post-commencement creditors are entitled to vote on business rescue plans under Chapter 6 of the Companies Act. It resolves a significant controversy in South African business rescue jurisprudence, has important implications for post-commencement financing, and reinforces a purposive, constitutionally compliant approach to statutory interpretation in company law.