Abstract
The introduction of business rescue mechanism in chapter 6 of the Companies Act 71 of 2008 marked a significant shift in South Africa’s corporate insolvency regime towards a rescue-oriented approach. Creditors play a central role in this process, particularly through their right to vote on the adoption of a business rescue plan. However, the failure to include the definition of the term “creditor” in the Companies Act has resulted in uncertainty regarding whether voting rights extended by the Act to creditors, are limited to pre-commencement creditors or to post-commencement creditors whose claims arise after business rescue proceedings have begun.
This dissertation examines whether, on a proper interpretation of the Act, post-commencement creditors are entitled to vote in terms of section 152 of the Act. The analysis is based on a critical evaluation of the High Court and Supreme Court of Appeal decisions in Mashwayi Projects (Pty) Ltd v Wescoal Mining (Pty) Ltd. While the Supreme Court of Appeal adopted an inclusive interpretation, holding that the term “creditor” encompasses both pre- and post-commencement creditors, this dissertation argues that such an approach fails to account for the different treatment of creditors embedded within the Act.
This dissertation employs a doctrinal research methodology to critically analyse whether post-commencement creditors are entitled to vote in terms of section 152 of the Companies Act. This study will consider legislation, case law, academic literature and best practises from other jurisdictions. This dissertation contends that granting voting rights to post-commencement creditors undermines the legislative balance of the business rescue regime. It further argues that a purposive and constitutionally aligned interpretation supports the exclusion of post-commencement creditors from the voting process in order to promote legal certainty, fairness, and the effective functioning of business rescue proceedings.