ASSIGNMENT 02
Question: 1
Barbara is a business rescue practitioner of Thirsty Elephants (Pty) Ltd, a company that is under
business rescue. She convenes a meeting of the creditors of Thirsty Elephants (Pty) Ltd to
discuss and vote on the business rescue plan. The business rescue plan contain...
COMPANY LAW
QUESTION 1
Barbara can consider applying to a court to set aside the vote of Winelands Packers
(Pty) Ltd under the Companies Act 71 of 2008.
Grounds for Application
In terms of section 153(1)(a)(ii) of the Companies Act 71 of 2008 if a business
rescue plan has been rejected the business rescue practitioner may advise the
meeting that the company will apply to a court to set aside the result of the vote on
the grounds that it was inappropriate. In terms of section 153(7) (1) of the
Companies Act, in such an application a court may order the vote on the business
rescue plan to be set aside if the court is satisfied that it is reasonable and just to do
so.
The court will have regard to the following factors:
• The interests represented by the person who voted against the proposed business
rescue plan
• The provision, if any, made in the proposed business rescue with respect to the
interests of that person and
• A fair and reasonable estimate of the return to that person if the company were to
be liquidated.
Factors the Court Will Consider
1. Reasonableness of the Vote: The court will assess whether the vote by
Winelands Packers (Pty) Ltd was reasonable. This involves examining
whether the vote was made in good faith and whether it was based on rational
grounds.
2. Prejudice to Other Creditors: The court will consider whether the vote
prejudices the interests of other creditors, employees, and the overall success
of the business rescue plan.
3. Impact on Business Rescue: The court will evaluate the impact of the vote
on the potential success of the business rescue plan. If the vote significantly
hinders the rescue efforts, it may be deemed unreasonable.
4. Provisions in the Plan: The court will review the provisions of the business
rescue plan to ensure that it fairly protects the interests of all creditors,
including secured creditors like Winelands Packers (Pty) Ltd.
Relevant Case Law
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