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Assume for the purposes of this question only that Mr C Tower (one of C9A’s executive board members) is unhappy with Mr C Flight. He is of the view that Mr C Flight is out of line for requesting each director of C9A to hand over all the books and records that relate to the affairs of the company, and which are in their possession. Furthermore, he is outraged by the fact that Mr C Flight requested the directors of C9A to provide him with a statement of affairs of the company within five business days after the business rescue proceedings began. Mr C Tower believes that Mr C Flight is being “bossy and unreasonable” and is of the view that his demands are not envisaged by the Companies Act. He approaches you for advice as to whether this is the case. How would you advise him?
Assume for the purposes of this question only that Mr O’Mally (one of C9A’s executive board members) is of the view that he, as a senior executive board member, is not required to continue to exercise the functions of a director, including management functions, during the subsistence of the business rescue proceedings. Mr O’Mally is also of the view that he is not required to take instructions from Mr C Flight or attend to his requests (including requests for information about the company’s affairs) on the basis that he is more experienced in the management of companies. Lastly, Mr O’Mally believes that he may take action on behalf of C9A without the approval of Mr C Flight. Based on the above and in light of your knowledge of the Companies Act, is Mr O’Mally’s understanding of his role as a director correct?
Assume for the purposes of this question only that the Mr A Loft and Ms F Igure are making every effort to impede and obstruct Mr C Flight in the performance of his duties and in the exercise of his powers. Mr C Flight is frustrated as the directors’ conduct is hampering the effective supervision of the company and the development of the business rescue plan. Mr C Flight approaches you for advice on how to deal with the obstructive directors. How would you advise him?
Assume for the purposes of this question only that Mr C Flight is a junior practitioner and that his appointment as the business rescue practitioner of C9A is his first appointment to act in this capacity. For this reason, he is uncertain as to what his role and duties are in respect of the company. He approaches you for advice as he is aware that you have successfully completed the SAIBA business rescue course. Which of the following statements will form part of your advice?
Assume for purposes of this question only that C9A’s most recent public interest score, as calculated in terms of Regulation 26(2) is 300 (three-hundred). Furthermore, assume for purposes of this question only that Mr C Flight (being a person who is qualified to be appointed as a business rescue practitioner in terms of section 138(1) of the Companies Act) has been actively engaged in business turnaround practice before the effective date of the Act, or as a business rescue practitioner in terms of the Companies Act, for a combined period of 7 years. Mr C Flight approaches you for advice as to whether he is a senior, experienced, or junior practitioner in terms of Regulation 127(2)(c) and whether C9A is a large, medium, or small company. In addition, Mr C Flight would like to know whether he may take up an appointment as the business rescue practitioner of C9A given his level of experience. How would you advise him?
Assume for purposes of this question only that Mr C Flight is approached by AEGE, one of C9A’s major creditors. AEGE would like to conclude what they term a “success fee” agreement with Mr C Flight, in terms of which they will pay an amount of R350 000 (from their own bank account) to Mr C Flight, upon substantial implementation of the business rescue plan that is still to be approved in the manner contemplated in section 152(2), at a meeting called for that purpose in terms of section 151. Mr C Flight is happy with the terms of the “success fee” agreement and is satisfied that it will not affect the distribution paid to creditors, since it is to be paid from AEGE directly. Furthermore, Mr C Flight is aware of his duties to act independently and intends to perform his functions in good faith and with the requisite degree of care and skill, by including this agreement in C9A’s business rescue plan. Turbine Tyres (Pty) Ltd, another creditor of C9A, is informed of this “success fee” agreement and is outraged. Turbine Tyres is of the view that this agreement is unlawful, invalid, and contrary to public policy. Turbine Tyres approaches you for advice as to whether their contentions in respect of the agreement are correct. With reference to the judgment in Caratco (Pty) Ltd v Independent Advisory (Pty) Ltd [2020] ZASCA 17 (25 March 2020), how would you advise them?
Assume for purposes of this question only that Mr C Flight, since his appointment as business rescue practitioner, has engaged in illegal acts and conduct during the business rescue process of C9A. Furthermore, Mr C Flight has unabatedly sold the assets of the company without having regard to how the business of C9A would operate going forward. In this way, Mr C Flight acted without the proper degree of care and skill in the performance of his functions. A shareholder named Ms Manage approaches you for advice as to the steps that may be taken against Mr C Flight in light of his mala fide conduct. It is worth noting that a business rescue plan has already been adopted in terms of section 152. Based on the above facts, which of the following statements will not form part of your advice?
Assume for the purposes of this question only that Mr C Flight is a junior practitioner and that his appointment as the business rescue practitioner of C9A is his first appointment to act in this capacity. For this reason, he is uncertain as to what whether he is required to convene a first meeting of creditors, as contemplated in section 147. Furthermore, he wants to know what the purpose of a creditor’s committee is. He approaches you for advice as he is aware that you have successfully completed the SAIBA business rescue course. Which of the following statements will form part of your advice?
Mr C Flight is concerned that, by taking on the appointment as the business rescue practitioner of C9A, he is exposing himself to the possibility of incurring personal liability. In order to guard against this, he asks you to advise him of the sections in the Companies Act that he is to look out for. Which of the following statements will form part of your advice to him?
Assume for the purposes of this question only that the board of directors of C9A opted to enter into a compromise in terms of section 155 of the Companies Act 71 of 2008, instead of voluntarily commencing business rescue proceedings in terms of section 129. The board of directors of C9A are of the view that section 155 provides for a general moratorium against legal proceedings whilst the compromise is being negotiated. You have been asked to confirm that this is in fact the position. How would you advise them, based on your knowledge of the Companies Act?
Assume for the purposes of this question only that the board of directors of C9A opted to enter into a compromise in terms of section 155 of the Companies Act 71 of 2008 instead of voluntarily commencing business rescue proceedings in terms of section 129. Assume for purposes of this question that this decision to enter into a compromise was motivated by Mr A Loft who has bound himself as surety for the debts of C9A in an amount of R100 million. Mr A Loft is of the view that his liability as a surety of the company will be extinguished as soon as C9A proposes a compromise of its financial obligations to all of its creditors. Mr A Loft is overjoyed once the copy of the proposal was sent to all the creditors of the company in the manner contemplated in section 155(2), as he was of the view that he was no longer a surety of C9A’s debts! He calls you on the phone and happily brings this to your attention. How would you respond to him?
Assume for the purposes of this question only that Heavy Bags Proprietary Limited (Heavy Bags), one of C9A’s creditors that supplies baggage handling services in respect of C9A’s international flights becomes aware of the fact that the CFO, Mrs F Igure is married to Mr C Flight’s brother. The CEO of Heavy Bags is of the view that is unacceptable given the fact that business rescue practitioners must avoid conflicts of interest and must act independently. He approaches you for advice on the steps that Heavy Bags may take to remedy the situation. Which of the following statements will form part of your advice?
Assume for purposes of this question only that Mr C Flight, after having secured sufficient post commencement finance and having consulted with all affected persons, is ready to publish a business rescue plan for consideration and possible adoption at a meeting held in terms of section 151. However, Mr C Flight is unsure as to whether he has included enough information in the proposed plan. Accordingly, he approaches you for advice on this issue. In light of your knowledge of the Companies Act and reported case law, which of the following statements will form part of your advice to him?
Assume for purposes of this question only that Mr C Flight, after having secured sufficient post commencement finance and having consulted with all affected persons, is ready to publish a business rescue plan for consideration and possible adoption at a meeting held in terms of section 151. Mr C Flight delivers a notice of the section 151 meeting to all affected persons in accordance with section 151(2) of the Companies Act. Ms Manage (a shareholder of C9A) after receiving the aforesaid notice would like to know whether she is entitled to vote at the section 151 meeting and approaches you for advice. Assuming for purposes of this question that the business rescue plan does not alter the rights of shareholders, how would you advise her?
Assume for purposes of this question only that C9A’s section 151 meeting to consider the plan is scheduled for Wednesday, 30 September 2020. In light of this, the head of legal at C9A’s bank approaches you for advice. The head of legal would like to know whether the bank (as a secured creditor) is able to vote on the business rescue plan, seeing that their position is safeguarded by virtue of the aircraft mortgage bonds registered over 10 of C9A’s aircraft. How would you advise him in light of your in-depth knowledge of the Companies Act?
Assume for purposes of this question only that C9A’s section 151 meeting to consider the plan is scheduled for Wednesday, 30 September 2020. The directors of C9A are anxious about the meeting and hope that the business rescue plan is approved in terms of section 152(2). In light of this, the directors approach you for advice as to the percentages that are required in terms of the Companies Act to approve the plan. Assume for the purposes of this question only that the business rescue plan alters the rights of shareholders. Based on the above facts, which of the following statements will form part of your advice to the board of directors?
Assume for the purposes of this question only that at C9A’s section 151 meeting, the business rescue plan put forward by Mr C Flight was rejected as it was not approved on a preliminary basis by the holders of voting interests, as contemplated in section 152(2). Mr C Flight is not happy with this result and wishes to take further steps, as he is of the view that the result of the vote was inappropriate. Accordingly, Mr C Flight approaches you for advice regarding the consequences of an order setting aside a vote as inappropriate. Based on your knowledge of the judgment of the Supreme Court of Appeal in FirstRand Bank Ltd v KJ Foods CC (in business rescue) (734/2015) [2015] ZASCA 50 (26 April 2017), which of the following statements will form part of your advice?
Assume for the purposes of this question only that at C9A’s section 151 meeting, the business rescue plan put forward by Mr C Flight was rejected as it was not approved on a preliminary basis by the holders of voting interests, as contemplated in section 152(2). The board of directors of AEGE (a creditor of C9A) is dissatisfied with this outcome, as the board is of the view that there is a reasonable prospect of rescuing C9A, provided the business rescue plan is approved and promptly implemented. They are further of the view that the preparation and publication of a revised plan is unnecessary and will only cause further delays, which it believes would be detrimental to the company’s prospects. Accordingly, AEGE approaches you for advice as to the steps that they may take in order to ensure that C9A’s business rescue plan is approved. Assume for the purposes of this question that AEGE’s board are not in favour of applying to court to set aside the result of the vote on the grounds that it was inappropriate. Which of the following statements will form part of your advice to AEGE’s board?
Assume for the purposes of this question only that C9A’s business rescue plan has been approved in the manner contemplated in section 152(2) of the Companies Act 71 of 2008. The board of directors of CAA is unhappy with this outcome, as the approved business rescue plan of C9A contemplates a compromise of CAA’s claim against C9A. Furthermore, the board is of the view that a dividend of 10 cents in the Rand for concurrent creditors, as contemplated in the approved business rescue plan, is wholly unacceptable. Accordingly, and unsurprisingly, CAA voted against the approval of the business rescue plan at C9A’s section 151 meeting. The board of CAA approach you for your expert advice. They would like to know whether C9A is bound to the approved business rescue plan in terms of the provisions of the Companies Act. How would you advise them?
Assume for the purposes of this question only that the business rescue plan of C9A has been approved by both creditors and shareholders at the required voting threshold, and that Mr C Flight has fully implemented the terms of the plan. Mr C Flight would like to know what steps need to be taken in order for the business rescue proceedings of C9A to end in terms of the provisions of the Companies Act 71 of 2008.