Absa Bank Limited v Hammerle Group (Pty) Ltd

Absa Bank advanced two loans to Hammerle Group (Pty) Ltd: a R4 million loan secured by a notarial bond, and a R10 million shareholders’ loan under a subscription and shareholders’ agreement. The latter loan was contractually subordinated to the claims of other creditors. Hammerle Group failed to service its debts and admitted that it was unable to pay its creditors. Absa applied for the winding-up of Hammerle Group on the basis of commercial insolvency under s 345 of the Companies Act 61 of 1973. The High Court dismissed the application, holding that part of the debt had prescribed and that the subordinated debt was not due and payable. Absa appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order placing the respondent under final liquidation in the hands of the Master of the High Court, with costs to be costs in the winding-up.

The case clarifies that a subordinated creditor qualifies as a contingent creditor with standing to seek winding-up of a company. It affirms that admissions of insolvency are admissible in liquidation proceedings notwithstanding settlement privilege, and confirms that acknowledgements of debt interrupt prescription. The judgment strengthens creditor protection in insolvency proceedings and underscores the public interest nature of liquidation.