preferential treatment
A win and more protection for landlords
Proposed amendment to the Companies Act could effectively overturn high court ruling regarding business rescue
Nearly two years ago, in November 2016, the high court in Pretoria rejected an application from the SA Property Owners’ Association to amend the Companies Act to give landlords preference over other creditors in business rescue proceedings. Now, the first substantial amendments to the Companies Act since it was implemented in 2011, released for comment at the end of September, include a proposal that would give landlords the very rights that were strongly rejected by the high court. In a nutshell, that high court action was geared at ensuring that rental costs — often including rates, water and electricity — incurred when a company is in business rescue are covered ahead of the claims of other creditors. But if the new Companies Act amendments are accepted, it could up-end the business rescue process, introduced in 2011. "This opens the door to all the other suppliers who will demand the same sort of preferential rights," says one legislator. For one thing, he argues, the proposed a...
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