Lutchman N.O. and Others v African Global Holdings (Pty) Ltd and Others; African Global Holdings (Pty) Ltd and Others v Lutchman N.O. and Others

Following revelations at the Zondo Commission, banks withdrew facilities from African Global Operations (Pty) Ltd, the treasury company of the Bosasa group. This led to African Global Operations and its subsidiaries being placed into voluntary liquidation. Joint provisional liquidators were appointed and began exercising statutory powers. African Global Holdings (the holding company) challenged the validity of the winding‑up resolutions and the liquidators’ appointments, but this challenge ultimately failed on appeal. While liquidation proceedings were ongoing, African Global Holdings launched a business rescue application under s 131(1) of the Companies Act 71 of 2008 in respect of six companies, and contended that liquidation proceedings were automatically suspended under s 131(6). Before the business rescue application was fully prosecuted and properly served, the liquidators sold assets of the companies by public auction. Holdings then brought an ‘auction application’ seeking to interdict the sales and declare them invalid. The Gauteng High Court granted the auction relief and dismissed the business rescue application. Both sides appealed to the Supreme Court of Appeal.

The auction appeal (case no. 1088/2020) was upheld with costs; the High Court’s order granting auction relief was set aside and replaced with an order dismissing the auction application with costs. The business rescue appeal (case no. 1135/2020) was largely dismissed; the business rescue application was struck from the roll, and adverse costs orders were made against the applicants.

This judgment authoritatively clarifies the meaning of when a business rescue application is ‘made’ under s 131(6) of the Companies Act. It confirms that liquidation proceedings are not automatically suspended by the mere issuing of an application, thereby preventing abuse of business rescue filings to stall lawful liquidation processes. The case is a leading authority on the interaction between liquidation and business rescue in South African company law.