Business rescue twist: SCA says new money means new votes
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The Supreme Court of Appeal (SCA) has reshaped how business rescue plans are adopted in South Africa, and the implications reach well beyond specialist practitioners.
The court has held that the word “creditor” in Chapter 6 of the Companies Act is not limited to creditors who existed at the moment business rescue commenced. Post-commencement creditors (PCFs) (i.e those who provide credit or finance during the rescue process) have a voting interest and their votes must be counted when determining whether the statutory thresholds in section 152 have been achieved.
As a result, a plan that appeared to obtain the required majorities when only pre-commencement creditors were counted may nonetheless fail once PCF votes are included.
Why this matters to CIBA members and accountants
For accountants and BRPs alike, this decision creates immediate practical duties. Accountants who advise or support business rescue processes must:
Ensure voting tallies include PCFs: A plan that looks passed may not stand once these votes are factored in.
Change how proofs-of-claim and voting interests are verified and recorded: The timing and validity of PCF claims must now be properly documented.
Reassess the accounting and disclosure treatment of post-commencement finance: Section 135 gives PCFs special protections that must be reflected in financial statements.
Strengthen meeting controls and audit trails: Vote disputes are increasingly likely, and practitioners will need defensible, auditable processes to avoid crippling litigation.
In short, the ruling means more paperwork, more scrutiny, and higher stakes for accountants and BRPs administering rescue plans.
How we got here: High Court vs SCA
The High Court (Gauteng, Wilson J) had ruled that “creditors” meant only those in existence at the start of rescue. Under that approach, PCFs were excluded from voting.
The SCA (Dippenaar AJA) overturned that view in Mashwayi Projects (Pty) Ltd and Others v Wescoal (Pty) Ltd and Others (29 January 2025). It held that nothing in Chapter 6 restricts the definition of “creditor” and that the ordinary, purposive reading includes all creditors, both pre- and post-commencement.
This interpretive shift means rescue plans that looked secure under the High Court’s approach may now be open to challenge.
Practical checklist for meetings
Pre-meeting: Compile two registers – pre-commencement creditors and PCFs – with amounts, ranking, and independence flags. Deliver proper s151(2) notice.
During meeting: Record all votes in a single master sheet, capture proxies and electronic votes with timestamps, and involve an independent tally reviewer.
Post-meeting: Circulate a verified tally report. If disputes remain, consider adjourning and reconvening rather than pressing ahead with a defective outcome.
Accounting consequences to consider
Recognition and classification: PCF advances must be properly classified as liabilities, with their ranking disclosed.
Going-concern: If the validity of a vote is disputed, accountants must assess the impact on going-concern disclosures and provide evidence in the audit file.
Cash-flow modelling: Plans should clearly show how PCF repayments affect distributions to other creditors.
Tax/VAT: Repayments or preferences linked to PCFs may trigger additional tax considerations that should be flagged early.
Looking ahead
The SCA made it clear: Policy debates about whether PCFs should vote are for Parliament, not the courts. For now, the law is settled: PCFs count, and their votes must be included.
For CIBA members, the ruling reinforces the importance of being both technically sharp and procedurally cautious. Get it right, and you protect your client’s second chance. Get it wrong, and you risk litigation, reputational damage, and a failed rescue.
👉 Join CIBA and we’ll show you how to update your checklists, proof-of-claim procedures, and voting records so your next business rescue plan stands up to both audit and appeal.
