1. Turnaround Management Association of Southern Africa - presentation Panamo Properties (Pty) Ltd v Nel and Another NNO NUMSA v Wilro Supplies CC & Companies and Intellectual Property Commission Alex Eliott (Partner) Business Rescue and Insolvency department 16 September 2015

2. www.hoganlovells.com Panamo Properties (Pty) Ltd v Nel and Another NNO. Facts: Sole shareholder was a trust; Trustees were Mr & Mrs Nel. Also the directors; Their house on a commercial property owned by company; BRP - Dawie van der Merwe (our client); Business rescue proceedings commenced in October 2011 Business rescue plan adopted by all creditors (including Nels) in February 2012; BRP convened a public auction after the Nels were unable to raise finance to pay off company's debts, and sold the property; When the property was about to be transferred, in October 2013, the Nels brought an urgent application to court alleging that the company had not complied with the procedural requirements laid down in Section 129(3) and (4) of the Companies Act & as a result the entire business rescue process was a nullity in terms of Section 129(5); 2

3. www.hoganlovells.com Panamo Properties (Pty) Ltd v Nel and Another NNO. The procedural non-compliance consisted of a failure to give timeous notice to affected persons, for which the Nels themselves were responsible. What about section 130(1) time limit? Court a quo (High Court): Upheld the argument of the Nels; Declared the business rescue proceedings a nullity and placed the company in liquidation. Relied on Fabricius' judgment in Advanced Technologies and Engineering Company (Pty) Ltd 3

4. www.hoganlovells.com Panamo Properties (Pty) Ltd v Nel and Another NNO. Supreme Court of Appeal- Judgment: Non-compliance with the procedural requirements of Sections 129(3) and (4) of the Companies Act does not automatically result in the proceedings becoming a nullity, notwithstanding the provisions of section 129(5); Business rescue proceedings will only be terminated when the court sets the resolution aside; The court will only set aside the business rescue resolution & terminate the business rescue if it is satisfied that, in the light of all the facts, it is just and equitable to do so – section 130(5)(a)(ii); This approach precludes a company from passing a resolution in order to gain the protection of Chapter 6 for a brief period of time, only to exit the procedure due to the resolution lapsing and becoming a nullity at a later date. 4

5. www.hoganlovells.com Panamo Properties (Pty) Ltd v Nel and Another NNO. Comment: This judgment is to be reported, & is to date one of the most significant & ground-breaking judgments handed down on business rescue; Likely to have profound positive implications for the business rescue industry; The court adopted a purposive approach & clarified & guided the way in which chapter 6 of the Companies Act must be interpreted in the future; This approach by the court will benefit all business rescue practitioners & attorneys who live business rescues. 5

6. www.hoganlovells.com NUMSA v Wilro Supplies CC & Companies and Intellectual Property Commission Facts: Wilro employs approximately 165 of NUMSA's members. During March 2015 the Labour Court granted an award against Wilro in the amount of R1.7 million and in favour of 16 employees that had been previously retrenched by Wilro. Shortly thereafter the members of Wilro brought an application to place Wilro in liquidation. All of Wilro's employees perform the manufacturing work of another entity by the name of Dunrose Trading 57 (Pty) Ltd t/a Abracon. Wilro does not have its own business premises. Wilro and Abracon have had a working relationship in excess of 10 years. Wilro does not have any other clients. The managing member of Wilro is also the managing director of Abracon. NUMSA successfully brought a counter-application against Wilro for the staying of the liquidation proceedings and placing Wilro under supervision and business rescue. 6

7. www.hoganlovells.com NUMSA v Wilro Supplies CC & Companies and Intellectual Property Commission Court's findings: The Court in the business rescue proceedings found that liquidation was not in the best interests of the employees of Wilro, who were also the largest creditors and that a business rescue practitioner ought to investigate the affairs of Wilro and endeavour to offer the creditors a better return than in liquidation. The court found that on the facts before it, Wilro could and should be rescued in accordance with the provisions of Section 131(4). The Court also felt that business rescue may in fact be beneficial to all the parties including the members who had made loans to the business whch they were prepared to write off in liquidation. The Court found that the relationship between Wilro and Abracon required further investigation. If liquidation was to be granted, the said investigation would in all likelihood not be carried out. 7

8. www.hoganlovells.com NUMSA v Wilro Supplies CC & Companies and Intellectual Property Commission General Comments: It is the first case since the introduction of business rescue provisions in the new Companies Act where a trade union representing the labour force has successfully placed an employer in business rescue and saving jobs in the process. It is hoped that this decision will herald an era of embracing business rescue as an opportunity for labour and not as a threat to jobs and membership. 8

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