The position of the post-commencement creditor in relation to business rescue proceedings

Kylene Weyers, Director in our Business Rescue, Restructuring & Insolvency sector, together with Gideon Slabbert, Juliette de Hutton, and Prof Andre Boraine joined CDH Conversations to discuss the controversial recent judgment of Wescoal Mining (Pty) Ltd & Another v Mkhombo NO & Others (2023-079991) [2023] ZAGPJHC 1097 (2 October 2023), as well as various other ancillary aspects stemming from the judgment. The judgment concluded that post-commencement creditors in a business rescue (which includes post-commencement financiers) are not “creditors” as defined in Chapter 6 of the Companies Act 71 of 2008, and therefore cannot vote on a business rescue plan. Kylene discusses that the judgment failed to take into account the commercial realities of business rescue and she concludes that the judgment negatively impacts the prospects of future successful business rescues in our country. The speakers also consider the current legal position pursuant to the judgment, and further take a look at a comparative approach in international jurisdictions.