Afrisam (South Africa) (Pty) Ltd v Maleth Investment Fund (Pty) Ltd

Maleth Investment Fund, a creditor of Cemlock Cement (Pty) Ltd, launched an application on 31 October 2013 for Cemlock’s compulsory winding-up on the basis that it was unable to pay its debts. Before that application was finalised, Cemlock was placed into creditors’ voluntary winding-up on 12 March 2014 following the registration of a special resolution. Approximately eighteen months later, Maleth obtained a court order (December 2015) for Cemlock’s compulsory winding-up, expressed to be effective from 31 October 2013. Liquidators appointed thereafter instituted proceedings against Afrisam, another creditor, to recover payments made to Afrisam prior to 31 October 2013 as impeachable dispositions under ss 29 and 30 of the Insolvency Act 24 of 1936. Afrisam sought to intervene and rescind or vary the winding-up order, contending that the intervening voluntary winding-up extinguished or displaced the original compulsory winding-up application and that the effective date for winding-up could not be 31 October 2013.

The appeal was upheld with costs. The order of the high court was set aside and replaced with an order granting Afrisam leave to intervene and varying the December 2015 winding-up order by deleting the words “with effect from 31 October 2013”, with costs awarded against Maleth.

The judgment restates and clarifies South African company and insolvency law principles governing the interaction between voluntary and compulsory winding-up. It authoritatively confirms that an intervening voluntary winding-up does not extinguish a pending compulsory winding-up application and that, where a compulsory winding-up supersedes a voluntary one, s 340(2)(a) of the Companies Act 61 of 1973 determines the relevant date for impeachable dispositions. The case is important for liquidators and creditors in assessing recoverability of pre-liquidation transactions.