LML4806 Assignment 2 Semester 2 Due 18 September 2024 (Detailed Answers)
142 views 7 purchases
Module
Company Law
Institution
University Of South Africa
Book
Company Law
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 contains ample provis...
Company Law - Corporate Insolvency - Full lecture notes, textbook readings, further readings
Company Law - Corporate Contracting & Constitution - Full lecture notes, textbook readings, further readings
Company Law - Director's Duties & Corporate Management - Full lecture notes, textbook readings, further readings
All for this textbook (26)
Written for
University of South Africa
Company Law
All documents for this subject (24)
Seller
Follow
GeniusGears
Reviews received
Content preview
LML4806
Assignment 2
Semester 2024
Due 18 September 2024
, Question 1
Barbara, as a business rescue practitioner of Thirsty Elephants (Pty) Ltd, faces a
situation where one of the secured creditors, Winelands Packers (Pty) Ltd, has voted
against the adoption of the business rescue plan. Given that all other creditors, both
secured and unsecured, have voted in favor, Barbara is understandably concerned
about the negative impact of this dissenting vote on the successful rescue of the
company.
Grounds for Application to Set Aside the Vote
According to Section 153 of the Companies Act 71 of 2008, Barbara can indeed
apply to the court to set aside Winelands Packers (Pty) Ltd’s vote if it can be shown
that the vote was inappropriate or unreasonable and prejudiced the interests of other
affected parties. Specifically, Section 153(1)(a)(ii) allows an affected person (which
includes the business rescue practitioner) to apply to a court to set aside a vote on a
business rescue plan if it is believed that the vote was unreasonably prejudicial to
the interests of the company, creditors, or employees.
Factors the Court Should Consider
1. Reasonableness of the Vote: The court will assess whether Winelands
Packers’ vote was reasonable given the circumstances. This in volves looking
at whether the creditor’s decision was based on a rational assessment of their
own interests and the company's interests.
2. Impact on Other Creditors and Employees: The court will also consider the
potential prejudice to other creditors and employees if the plan is not adopted.
If the court finds that the rejection of the plan by Winelands Packers (Pty) Ltd
disproportionately harms these parties, it may be more inclined to set aside
the vote.
3. Provisions in the Business Rescue Plan: The court will evaluate the terms of
the business rescue plan, especially those that protect the interests of
secured creditors. If the plan is fair and equitable to all parties, including
Winelands Packers, the court may view their dissent as unreasonable.
Effect of Setting Aside the Vote
If the court decides to set aside Winelands Packers (Pty) Ltd’s vote, the business
rescue plan will be considered as approved by the requisite majority. This means
that the rescue plan can proceed, potentially leading to the successf ul turnaround of
Thirsty Elephants (Pty) Ltd. This outcome would benefit not only the company but
also its employees and other creditors, aligning with the overall purpose of business
rescue, which is to rehabilitate financially distressed companies in a w ay that
balances the rights and interests of all stakeholders.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller GeniusGears. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £2.23. You're not tied to anything after your purchase.
