Collard v Jatara Connect (Pty) Ltd and Others (23510/2016) [2017] ZAWCHC 45; 2018 (5) SA 238 (WCC) (14 March 2017)

Collard v Jatara Connect (Pty) Ltd and Others (23510/2016) [2017] ZAWCHC 45; 2018 (5) SA 238 (WCC) (14 March 2017)

The court found that Edcon's vote against the amended business rescue plan was inappropriate, as it was cast with the sole intention of frustrating the arbitration proceedings against Edcon and not in the interests of the general body of creditors. The business rescue plan offered a better return to creditors and employees than liquidation, with external funding for arbitration and a reasonable prospect of success. The business rescue practitioner had investigated the affairs of Jatara Connect and found no evidence of irregularities alleged by Edcon. The court held that it was reasonable and just to set aside Edcon's vote and declare the business rescue plan adopted, as the interests of...

Citation
[2017] ZAWCHC 45
Parties
Applicant: Taillifer Dale Collard; Respondent: Jatara Connect (Pty) Ltd; Respondent: Edcon Limited; Respondent: South African Revenue Services; Respondent: The Companies & Intellectual Property Commissioner of the Republic of South Africa
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
14 March 2017
Case Number
23510/2016
Procedural Posture
Business Rescue Application / Application to Set Aside Creditor Vote Under S 153(7) of the Companies Act
Outcome
Application granted. Edcon's vote against the amended business rescue plan is set aside. The business rescue plan is declared adopted. Edcon to pay costs.
Judges
D V Dlodlo
Legal Topics
Business Rescue, Creditors Meeting, Good Faith Voting, Setting Aside Vote, Companies Act 71 of 2008
Commercial and Corporate Civil Procedure Business Rescue Creditors Meeting Good Faith Voting Setting Aside Vote Companies Act 71 of 2008

Case Brief

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Parties

Taillifer Dale Collard

Applicant

Jatara Connect (Pty) Ltd

Respondent

Edcon Limited

Respondent

South African Revenue Services

Respondent

The Companies & Intellectual Property Commissioner of the Republic of South Africa

Respondent

Procedural Posture

Business Rescue Application / Application to Set Aside Creditor Vote Under S 153(7) of the Companies Act

Legal Issues

  1. 1 Whether Edcon's vote against the amended business rescue plan was inappropriate under s 153(7) of the Companies Act.
  2. 2 Whether it is reasonable and just to set aside Edcon's vote and declare the business rescue plan adopted.
  3. 3 Whether business rescue offers a better return to creditors than liquidation.

Ratio Decidendi

The court found that Edcon's vote against the amended business rescue plan was inappropriate, as it was cast with the sole intention of frustrating the arbitration proceedings against Edcon and not in the interests of the general body of creditors. The business rescue plan offered a better return to creditors and employees than liquidation, with external funding for arbitration and a reasonable prospect of success. The business rescue practitioner had investigated the affairs of Jatara Connect and found no evidence of irregularities alleged by Edcon. The court held that it was reasonable and just to set aside Edcon's vote and declare the business rescue plan adopted, as the interests of...

Court Disposition

Application granted. Edcon's vote against the amended business rescue plan is set aside. The business rescue plan is declared adopted. Edcon to pay costs.

Orders

  • The application by Edcon for admission of a further affidavit is granted with no order as to costs.
  • Edcon's vote against the amended business rescue plan at the meeting of affected parties on 24 November 2016 is declared inappropriate and set aside.