Contingent/conditional/damages claims all have locus standi to set aside BR resolution but, once a plan is rejected and no further steps are taken by the BRP, it’s over

Business rescue practitioners (BRPs) must tread with caution when they consider who is deemed a creditor in business rescue proceedings. Further care needs to be applied when the question of whether business rescue proceedings have actually been terminated by the rejection of a business rescue plan. These were questions the Pretoria High Court had to answer in the recent case of Rogal Holdings (Pty) Ltd and Another v Victor Turnkey Projects (Pty) Ltd and Others (53473/2021) [2022] ZAGPPHC.

8 Jun 2022 6 min read Article

At a glance

  • The Pretoria High Court recently addressed the issues of locus standi and the authority of business rescue practitioners (BRPs) to revise a rejected business rescue plan.
  • The court determined that a creditor with an unliquidated claim can be considered a creditor for business rescue proceedings, emphasizing the ordinary meaning of the term "creditor."
  • The court clarified that BRPs do not have the automatic right to revise a business rescue plan after it has been rejected and that the termination of business rescue proceedings occurs when the plan is finally rejected by the creditors.

The facts

  • On 10 January 2020 and 3 November 2020 respectively, the applicant, Rogal Holdings (Pty) Ltd (Rogal) and the first respondent, Victor Turnkey Projects (Pty) Ltd (VTP) concluded a written building agreement and an addendum to the agreement.
  • Rogal complied with all its contractual obligations in affording VTP access to attend to the building works, not hinder, interfere with or obstruct VTP in carrying out its work and made payment of all the milestone payments on or before the date the payments became due and payable.
  • VTP, however, breached the contractually agreed milestone and only completed 60% of the work.
  • Rogal elected to enforce its right to cancel the agreement on 30 July 2021 in light of the breach and was of the opinion that it had overpaid VTP and VTP was indebted to Rogal in the amount of R588,784.53.
  • Later, on 6 September 2021, VTP adopted a resolution to commence with voluntary business rescue proceedings in terms of section 129 (1) of the Companies Act, 71 of 2008 (the Act).
  • The first creditors’ meeting was held on 17 September 2021 and a second meeting held on 15 October 2021.
  • On 3 December 2021, a meeting of creditors was held and the proposed business rescue plan was rejected by the majority of creditors present at the meeting, which meant no business rescue plan had been adopted.
  • Rogal approached the court seeking an order that the resolution adopted by VTP to commence with business rescue proceedings in terms of the Act be set aside and that VTP be finally wound-up.

The issue of locus standi and whether BRPs are entitled to automatically revise a business rescue plan after the plan is initially rejected will be discussed in this article.

Locus standi

The main question the court had to grapple with was the issue of locus standi of Rogal to institute the proceedings before the court. Rogal stated it had the requisite locus standi to approach the court as it was a creditor of VTP. Rogal averred that for purposes of an application for business rescue, a creditor with an existing claim of which the enforcement is contingent or conditional, possesses the requisite locus standi to launch an application to set aside the resolution to commence business rescue proceedings.

VTP’s opposition to the proceedings was based on its belief of a lack of locus standi in light of section 130(1) of the Act, which makes provision only for an affected person to apply to court for an order setting aside the resolution placing the company into business rescue. VTP was of the belief that Rogal had a damages claim and as such it was an unliquidated claim and could therefore not be deemed to be a creditor in business rescue proceedings.

Van der Schyff J did not dispute that Rogal’s claim was an unliquidated claim against VTP. The court considered the judgment of Tredoux v Kellerman [2009(A 405/08) [2009] ZAWCHC 227 (3 February 2009) where it explained a liquidated claim as an amount which is either agreed upon or which is capable of “speedy and prompt ascertainment”. A liquidated claim is thus able to be merely calculated and is easily ascertainable. The Act does not define a creditor and the court considered Moosa v Olgar and Another 1932 NPD 686 where the question of whether a creditor must have a liquidated claim in order to be deemed a creditor in terms of section 121 of the Insolvency Act 32 of 1916. In the judgment, the court relied on the ordinary meaning of the word creditor as being “one who gives credit in business matters i.e. to say, one relying on the promise of a person to pay money has given credit to such person: and therefore means one to whom money is due” [emphasis added].

It was evident that the court had explored numerous judgments in considering whether Rogal was indeed a creditor. Trengrove J remarked in Gillis-Mason Construction Co (Pty) Ltd 1971 (1) SA 524 (T) that a person that has a valid claim for unliquidated damages for breach of a contract can be regarded as a creditor for purposes of section 113 of the repealed Companies Act 46 of 1926. Trengrove J went on to say “The mere fact that the claim may still be unliquidated, at the time of the filing of a winding up petition, should not in itself disqualify such an applicant from petitioning for winding up”. With a further consideration that the Act does not require that a creditor must have a liquidated claim before being recognised as a creditor, the court thus deemed that Rogal was a creditor for the proceedings before it and indeed had the requisite locus standi.

Are BRPs entitled to automatically revise a business rescue plan after it is initially rejected?

The final topic of interest relates to the status of business rescue proceedings after a plan has been rejected by creditors. Section 153(1) of the Act states that if a plan is rejected (not approved on a preliminary basis or there is opposition to the adoption of the plan), the BRP must either seek a vote of approval from the holders of voting interests to prepare and publish a revised plan or to advise the meeting of creditors that the company will apply to a court to set aside the vote in rejection of the plan as inappropriate.

Rogal contended that the BRP, Mr Jerifanos Mashamba, failed to publish the business rescue plan in terms of section 150(5) and that Rogal holdings did not agree to or vote in favour of an extension of the prescribed timelines for the publication of the rescue plan. The court did not delve further into this contention but interestingly focused on the rejection of the business rescue plan and the obligations flowing from the rejection. Mashamba did not advise the meeting that VTP would apply to court to set aside the result of the vote. The transcribed records show that when asked whether he would terminate the business rescue proceedings, he merely stated he would follow the provisions of the Act and would provide an amended rescue plan.

Section 153(5) of the Act, however, provides that if no party takes the requisite steps afforded by section 153(1), the BRP must file a notice of termination of the business rescue proceedings. The court considered section 132(2)(c)(i) which provides that business rescue proceedings end when the plan is finally rejected, the act of filing the termination notice is thus an act of good administration but not a requirement for the termination.

The court found that Mashamba ought to heed the provisions of section 153, which leaves a resounding statement to BRPs that it is not their prerogative to decided that a revised plan should be prepared and published. The meeting can direct the BRP to prepare a revised plan on request. As such, the court concluded that in the matter before it, the rejection of the final plan meant that through the operation of law, the business rescue proceedings were terminated.

Liquidation of VTP

Lastly, the question of the winding-up of VTP had to be adjudicated. The court found there was no reasonable prospect of VTP being rescued and this was based on Mashamba’s status report as the BRP. Van der Schyff J found that a proper case had been made to set aside VTP’s resolution for voluntary business rescue. The court confirmed the termination of the business rescue proceedings when the business rescue plan was rejected at the meeting of creditors on 3 December 2021. The court further granted the order placing VTP in provisional liquidation and granted a rule nisi for any interested persons to appear on the return date if they oppose the final liquidation of VTP.


Many an entity has probably self-disqualified itself from attempting to set aside a section 129(1) business rescue proceeding due to it having a damages claim. It is, however, evident with a judgment such as this that courts are inclined to apply ordinary meanings in order to see equitable business rescue proceedings conducted. The judgment also provides a careful warning to BRPs that the formalities that they find themselves obliged to do are indeed obligations and they might find the proverbial wool pulled from their eyes if they take these prescribed duties for granted.

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