The companies that own the Lily Mine and Barbrook Mine were placed into business rescue in 2016 shortly after the tragedy at Lily Mine where a crown pillar collapsed enclosing a container with three miners still inside namely, Pretty Nkambule, Solomon Nyirenda and Yvonne Mnisi. Regrettably the bodies of the 3 miners are yet to be retrieved.
There has been much litigation relating to the business rescue of the companies.
In December 2022 and June 2023, the Supreme Court of Appeal dismissed appeals brought by the owners of the mines in favour of Arqomanzi Proprietary Limited, represented by Carl Stein and Lionel dos Passos of Fluxmans Attorneys.
The December 2022 judgment is of particular interest to business rescue practitioners and legal practitioners. The court held that business rescue plans are the product of engagement between the practitioner and the creditors. In terms of Section 145(1) the creditors were entitled to be informed of each court proceedings, decision, meeting or other relevant event concerning the business rescue proceedings and may formally participate in a company’s business rescue proceedings to the extent provided for in the Act. A clause in a business rescue plan that provides for the unilateral amendment of the plan by practitioners is contrary to the scheme of the Act. At most a clause in the adopted business rescue plan would only allow for the amendments of an administrative nature that do not affect the substance of the plan.
The court held further the change in funders is no small matter. The change in funders goes into the heart of seeking to resuscitate a distressed company. The ability and credibility of such a funder is everything which the creditors of the distressed company, including effected persons would want to know and be sure of. The replacement of the funder and funding model is not merely an administrative amendment. It is central to the plan. The adopted business rescue plan could not be implemented because of lack of funds. The practitioners were not entitled to amend the adopted business rescue plan in the manner they did.
In the June 2023 the court was required to deliberate on numerous issues, one of which was whether or not consent of the Minister under section 11 of the Mineral and Petroleum Resources Development Act No. 28 of 2002 was required where there has been a change of control in the ultimate holding company. The court held that such consent was indeed required from the Minister.
For expert assistance in business rescue and/or litigation, contact Carl Stein and Lionel dos Passos
