Exam (elaborations)
LML4806 Assignment 2 2024
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LML4806Assignment 2
Semester 2 2024
, Question 1 Answers
Grounds of Application to Set Aside a Vote
Section 153 of the Companies Act 71 of 2008 prescribes that on good cause shown,
an interested person may apply to a court for an order setting aside a vote on a
business rescue plan if it is believed to have been improperly conducted, or if it
unfairly prejudices the interest of the applicant. Of particular relevance here is
Section 153(1)(b)(i), which states:
"If the business rescue plan was rejected, an affected person may. apply to a court
to set aside the result of the vote on the grounds that it was inappropriate."
Factors the Court Should Consider
In determining whether it is appropriate to set aside the vote, the court will take
account of a number of factors:
• Interest of the Creditors: The court will have to consider whether this business
rescue plan is fair and equitable to all the creditors. In this case, although
Winelands Packers Pty Ltd voted against, most other secured and unsecured
creditors were for, thus proving that this plan was beneficial according to the
majority.
• Interests of Employees: The court will consider the interest of the employees
of Thirsty Elephants Pty Ltd while sanctions the business rescue plan. If this
plan gives support to continued employment and welfare of such employee,
then it will be on a positive factor.
• Reasonableness of the Plan: The court will do a reasonability test of the
business rescue plan. If a plan provides the reasonable prospect of rescuing
the company, this will be in favor of setting aside the dissenting vote.
• Conduct of the Dissenting Creditor: The court may consider questions of good
faith on the part of the dissenting creditor's vote or some ulterior motive to the
vote. If Winelands Packers (Pty) Ltd voted against the plan for an unfair
advantage to be derived, or on grounds unrelated to the merits of the plan,
this could present a ground for setting aside the vote.
Relevant Case Law
The case of Oakdene Square Properties (Pty) Ltd v Farm Bothasfontein (Kyalami)
(Pty) Ltd and Others [2013] ZASCA 68, in particular, offers guidance as to how
Section 153 should be interpreted. In this case, the Supreme Court of Appeal
hammered out the necessity of coming up with a solution that must, at all costs, be
fair and equitable to all parties concerned. The court also pointed out that the
purposes of business rescue include one of maximizing the likelihood of the
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