Steloy Castings (Pty)Ltd and Others v B&K Castings (Pty)Ltd. (49326/2015) [2016] ZAGPPHC 673 (20 July 2016)

Steloy Castings (Pty)Ltd and Others v B&K Castings (Pty)Ltd. (49326/2015) [2016] ZAGPPHC 673 (20 July 2016)

The court found that the respondent was established for the sole purpose of evading the creditors of Bernades & Kin Foundry CC and fraudulently acquired its assets without payment. The transaction was structured to defeat the rights of creditors and constituted an alienation in fraudem creditorum, satisfying the...

Source-derived case information.

Citation
[2016] ZAGPPHC 673
Parties
Applicant: Steloy Castings (Pty) Ltd; Applicant: Gert Louwrens Steyn de Wet N.O; Applicant: Franz Serithi N.O; Respondent: B&K Castings (Pty) Ltd
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
20 July 2016
Case Number
49326/2015
Procedural Posture
Civil Application / Judgment After Application for Declaratory and Ancillary Relief
Outcome
Application granted. The acquisition by the respondent is declared void against the creditors, and the respondent is not deemed a separate legal entity from Bernades & Kin Foundry CC. Liquidation and distribution to proceed as one economic entity.
Judges
Madima
Legal Topics
Piercing Corporate Veil, Actio Pauliana, Fraudulent Conveyance, Insolvency Act Section 34, Locus Standi, Unlawful Competition
Commercial and Corporate Civil Procedure Piercing Corporate Veil Actio Pauliana Fraudulent Conveyance Insolvency Act Section 34 Locus Standi Unlawful Competition

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Parties

Steloy Castings (Pty) Ltd

Applicant

Gert Louwrens Steyn de Wet N.O

Applicant

Franz Serithi N.O

Applicant

B&K Castings (Pty) Ltd

Respondent

Procedural Posture

Civil Application / Judgment After Application for Declaratory and Ancillary Relief

Legal Issues

  1. 1 Whether the acquisition by the respondent of the assets of Bernades & Kin Foundry CC (in liquidation) is void against the creditors.
  2. 2 Whether the respondent should be deemed indistinguishable from Bernades & Kin Foundry CC for liquidation purposes.
  3. 3 Whether the applicants have locus standi to bring the application.

Ratio Decidendi

The court found that the respondent was established for the sole purpose of evading the creditors of Bernades & Kin Foundry CC and fraudulently acquired its assets without payment. The transaction was structured to defeat the rights of creditors and constituted an alienation in fraudem creditorum, satisfying the requirements for the actio Pauliana and the relevant sections of the Insolvency Act. The applicants had locus standi, having properly indemnified the liquidators. The respondent was deemed the alter ego of the insolvent entity, and the corporate veil was pierced to treat the respondent and the insolvent close corporations as one economic unit for liquidation and distribution...

Court Disposition

Application granted. The acquisition by the respondent is declared void against the creditors, and the respondent is not deemed a separate legal entity from Bernades & Kin Foundry CC. Liquidation and distribution to proceed as one economic entity.

Orders

  • It is declared that the acquisition by the respondent of its assets is void as against the creditors of Bernades & Kin Foundry CC (in liquidation) and/or B&K Foundry CC (in liquidation), and the respondent shall not be deemed a separate legal entity or distinguishable from the said close corporation (in liquidation).
  • The second and third applicants are ordered to liquidate and distribute the estates of Bernades & Kin Foundry CC, B&K Foundry CC, and the respondent as one economic entity.