Shiva Uranium (Pty) Limited (In Business Rescue) and Another v Tayob and Others

Shiva Uranium's board placed the company under voluntary business rescue in February 2018 in terms of section 129 of the Companies Act 71 of 2008, appointing Messrs Knoop and Klopper as practitioners. The company's largest independent creditor, the IDC, applied in terms of section 130(1)(b) to remove them. Before the hearing, Knoop and Klopper resigned. The High Court irregularly appointed Murray and Monyela as substitutes pursuant to section 130(6)(a) despite not having made an order setting aside the original appointments. Murray subsequently resigned. Monyela and Murray purported to appoint Damons as a senior practitioner. Shiva's board then resolved to appoint Tayob and Januarie as business rescue practitioners. This led to competing claims about who had the power to appoint Murray's replacement.

• Where a business rescue practitioner appointed by a court in terms of section 130(6)(a) of the Companies Act 71 of 2008 resigns, who has the power to appoint the replacement?
• Does section 139(3) of the Companies Act confer the power of appointment on the company's board or on the independent creditors who recommended or accepted the court-appointed practitioner?
• What is the proper interpretation of the phrase 'or the creditor who nominated the practitioner' in section 139(3) of the Companies Act?

1. The second applicant's application for leave to appeal is dismissed. 2. The second applicant must pay the first and second respondents' costs in this Court.

Section 139(3) of the Companies Act 71 of 2008 regulates only two scenarios: (1) in voluntary business rescue under section 129, the company retains the power to appoint a substitute practitioner upon resignation; and (2) in compulsory business rescue under section 131, the affected person who brought the application retains the power to appoint a substitute. The phrase 'or the creditor who nominated the practitioner' in section 139(3) refers to the affected person who nominated the practitioner in section 131(5), not to independent creditors contemplated in section 130(6)(a). Where a practitioner appointed by court in terms of section 130(6)(a) in place of a company-appointed practitioner resigns, the company's board has the power to appoint the replacement, subject to the right of affected persons to launch a fresh challenge under section 130(1)(b).

The Court made several important observations: (1) The original High Court order appointing Murray and Monyela was irregular because the jurisdictional prerequisites for appointing a substitute practitioner under section 130(6)(a) did not exist - Knoop and Klopper had resigned rather than been removed by court order. (2) It is doubtful whether a court may delegate its power of appointment to the CIPC. (3) The reference to 'creditor' in section 139(3) is infelicitous and should be read as 'creditor or other affected person' to avoid a lacuna where the affected person applying for compulsory business rescue is not a creditor. (4) Litigants making affidavits in applications for leave to appeal must scrupulously confine themselves to evidence adduced in the courts below, absent leave to adduce further evidence. (5) The invocation of sections 9 and 39(2) of the Constitution was specious and a belated attempt to clothe an ordinary matter of statutory interpretation in constitutional garb - there is insufficient commonality between creditors under section 131 and section 130(6)(a) to implicate the equality guarantee.

This judgment provides authoritative guidance on the appointment of substitute business rescue practitioners under the Companies Act 71 of 2008. It establishes that where a court-appointed practitioner (appointed under section 130(6)(a)) resigns, the company retains the power to appoint a replacement, subject to the right of affected persons to challenge the new appointment under section 130(1)(b). The judgment emphasizes the importance of interpreting the Companies Act in a manner that promotes efficient and expeditious business rescue proceedings. It clarifies that section 139(3) deals only with two scenarios: voluntary business rescue (where the company appoints) and compulsory business rescue (where the applicant creditor appoints). The decision promotes legal certainty and prevents potential delays and disputes that could jeopardize the success of business rescue proceedings.