Louis N O and Others vs. Fenwick N O and Others - (28 Apr 2023)

Once a business rescue plan is accepted, it will be implemented by the business rescue practitioner on the terms stipulated therein

Company

The issue before the Supreme Court was whether in business rescue proceedings, Section 153(4) of the Companies Act, 2008 is to be applied after a binding offer made in terms of Section 153(1)(b)(ii) of the Act has been rejected.

The literal meaning of Section 153(4) is clear, it says that if an affected person makes an offer, the practitioner must act as prescribed in Sections 153(4)(a) and (b). It further held that it is trite that a court may depart from the clear and unambiguous meaning of a statutory provision to avoid an absurdity and that the mere making of an offer in terms of Section 153(1)(b)(ii) could not have been intended to trigger the conjunctive steps mentioned in Sections 153(4)(a) and (b).

Once a business rescue plan is accepted, it will be implemented by the business rescue practitioner on the terms stipulated therein. But once a business rescue plan has been put to a vote and rejected as contemplated in Section 152 of the Act and, the parties have unsuccessfully exhausted their remedies as provided for in Section 153(1)(b), business rescue must come to an end.

It could not have been the legislature’s intention that a party whose voting interests remains unaltered as a result of the rejection of a binding offer, would be entitled to a further opportunity to exercise one of the alternatives provided for in Section 153(1)(b)(i) of the Act, holding that the interpretation contended for by the appellants simply does not amount to a sensible and business-like interpretation of Section 153(4) of the Act. Section 153(4) of the Act only finds application when a binding offer in terms of Section 153(1)(b)(ii) is accepted. Appeal dismissed.

Tags : BUSINESS RESCUE PROCEEDINGS OFFER