Rent A Tank JHB (Pty) Limited and Others v FuelGiants (Pty) Limited and Others (Consolidated Insolvency Matters)

Eight separate liquidation and sequestration applications were enrolled before the newly established dedicated insolvency court in the Gauteng Division during the week of 12-15 May 2025. Of the twelve unopposed liquidation or sequestration applications enrolled that week, only three were compliant with statutory formalities. The remaining matters exhibited serious deficiencies in complying with notice requirements to respondents, employees, and trade unions as mandated by section 346(4A) and section 346A of the Companies Act 1973 and sections 9(4A) and 11 of the Insolvency Act 1936. Common deficiencies included: (1) serving applications by merely affixing them to gates of residential addresses rather than business premises; (2) failing to make reasonable attempts to locate and notify employees; (3) failing to notify trade unions; (4) relying on sheriff's returns of service rather than proper service affidavits; (5) serving applications on single employees rather than making them accessible to all employees; and (6) in one case (ABSA Bank v Allo Rowed Properties), the respondent had been deregistered before the application was even launched. In the Kagiso Mookane matter, there was a nine-month delay between launching and serving the application, with no proper explanation, raising concerns about the retrospective effect of section 348 of the Companies Act 1973.

• Whether liquidation and sequestration applications can proceed where there has been non-compliance with statutory requirements to furnish notice of applications to respondents, employees, and trade unions
• The proper interpretation and application of sections 346(4A) and 346A of the Companies Act 1973 requiring notice to employees and trade unions in liquidation proceedings
• The proper interpretation and application of sections 9(4A) and 11 of the Insolvency Act 1936 requiring notice to employees and trade unions in sequestration proceedings
• The distinction between 'service' of documents and 'furnishing' of applications to employees
• Whether applications should be dismissed or removed from the roll where there are fundamental non-compliances
• Whether legal practitioners should be precluded from recovering fees where they enroll manifestly non-compliant applications
• The consequences of delay in prosecuting liquidation applications given the retrospective deeming provisions in section 348 of the Companies Act 1973

Seven applications removed from the roll with no order as to costs, but with orders precluding attorneys and counsel from recovering any fees or disbursements from clients relating to the enrolment and hearing. One application (Kagiso Mookane) dismissed with no order as to costs. All orders included provisions that legal practitioners could not recover fees for the wasted court appearances.

Effective notice of liquidation and sequestration applications to respondents, employees, and trade unions as required by sections 346(4A) and 346A of the Companies Act 1973 and sections 9(4A) and 11 of the Insolvency Act 1936 is a mandatory requirement that must be substantially complied with before final orders can be granted. 'Furnishing' applications to employees requires that the application be made accessible in a manner reasonably likely to bring it to their attention, which is distinct from formal 'service' by sheriff. Where there is non-compliance with notice requirements in unopposed matters, the court cannot grant final orders as this denies respondents and employees the opportunity to advance potentially meritorious opposition. While modes of furnishing notice may be directory, the requirement to furnish notice is peremptory. Applications that are manifestly non-compliant should not be enrolled or persisted with, and legal practitioners who do so may be precluded from recovering fees from their clients for wasted court appearances.

The court made several non-binding observations: (1) that the proliferation of non-compliant applications was symptomatic of an overall disregard for or inattentiveness to requirements for well-founded applications, both substantively and procedurally; (2) that in most cases where effective notice had been given, opposition was forthcoming, suggesting that lack of opposition may result from lack of effective notice rather than lack of merit to oppose; (3) that considerable judicial resources would be saved if non-compliant applications were not enrolled or were timeously removed; (4) that the deficiencies observed were particularly concerning given that the statutory requirements have been in place for over 22 years and have been the subject of many judgments; (5) that specific warnings in the published court roll notwithstanding, practitioners persisted in moving for orders where there was manifest non-compliance; (6) that ideally a business rescue practitioner should be well-placed to know about employees and trade unions and ensure effective notice; (7) that a 'stale' demand under section 345(1)(a) may not sustain a winding-up application, though this was not definitively decided; and (8) that ordinarily and absent explanation, applications for liquidation should be served by sheriff rather than by attorneys themselves given the seriousness of the relief sought.

This judgment provides comprehensive guidance on compliance with statutory formalities in liquidation and sequestration applications, particularly the notice requirements introduced in 2002 to protect employees' interests. It is significant for: (1) clarifying the distinction between 'service' and 'furnishing' in the context of insolvency proceedings; (2) emphasizing that effective notice to employees and trade unions is not a mere technicality but essential to protect their rights given the far-reaching consequences of insolvency orders; (3) setting standards for what constitutes reasonable efforts to notify employees; (4) explaining the serious consequences of delayed prosecution of liquidation applications given the automatic voiding effect of section 341(2) read with section 348; (5) establishing that courts will use cost orders against legal practitioners personally to discourage the enrollment of manifestly non-compliant applications that waste judicial resources; (6) providing guidance at the commencement of the dedicated insolvency court pilot project in the Gauteng Division; and (7) consolidating and applying principles from earlier authorities like EB Steam Company and Bravura Capital. The judgment serves as a stern warning to insolvency practitioners about the need for careful compliance with statutory formalities.