LML4806 ASSIGNMENT 2 ANSWERS OF SEMESTER 2 OF 2024
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QUESTION 1
Application to Set Aside a Creditor's Vote- Legal Framework and Analysis
Under South Africa's Companies Act 71 of 2008, particularly Chapter 6 which deals with
business rescue proceedings, a business rescue practitioner (BRP) like Barbara has specific
legal recourses when a creditor's vote may impede the successful rescue of a company. This
section outlines the relevant grounds, factors for consideration by the court, and potential
outcomes, supported by case law and statutory provisions.
Grounds for Application to Set Aside a Creditor's Vote
According to Section 153(1)(a)(ii) of the Companies Act 71 of 2008, a BRP can apply to a
court to set aside a creditor's vote on a business rescue plan if the vote is deemed
inappropriate, unreasonably prejudicial, or unjustifiably detrimental to the interests of
affected persons. The grounds for such an application may include:
1. Unreasonable or Inappropriate Voting Behavior- The BRP must demonstrate that the
vote cast by Winelands Packers (Pty) Ltd was not in good faith or was unreasonable
under the circumstances.
2. Detrimental Impact on Other Stakeholders- The BRP should show that the vote
negatively affects the interests of other creditors, employees, or other affected parties.
Relevant Factors for Court Consideration
In deciding whether to set aside a creditor's vote, the court typically evaluates several key
factors:
1. Interests of Affected Persons- The court assesses whether the vote unfairly prejudices
the interests of other creditors, shareholders, or employees. This is particularly
relevant in light of Section 7(k) of the Companies Act, which emphasizes the
protection of creditors and other stakeholders.
2. Viability of the Business Rescue Plan-The court considers whether the proposed plan
offers a reasonable prospect of rescuing the company. The Oakdene Square Properties
(Pty) Ltd v Farm Bothasfontein (Kyalami) (Pty) Ltd and Others 2013 (4) SA 539
(SCA) case highlighted the importance of a plan's reasonableness and practicality.
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