A burning issue in South African company law is the encroachment of
the business rescue provisions of the new Companies Act 71 of 2008 on
the rights of landlords and other property owners. A landlord who has
concluded a contract of lease with a company, frequently finds himself
in an unenviable position if the company goes into business rescue. The
company often remains in occupation of the leased premises during
business rescue and, if this is done without the payment of rent, the
business rescue endeavour is effectively driven at the landlord’s expense.
The focus of this two-part series of articles is on the two chief
predicaments facing the property owner who finds its property in the
possession of a company under business rescue, namely, the recovery of
the property by the property owner; and the ongoing payment of rent
and other recurring charges. This article discusses the moratorium in
business rescue with a specific focus on its effect on the property owner.
A critical analysis of recent judicial decisions on the moratorium is
included, together with a discussion of the legal position in comparable foreign jurisdictions. The second article will focus on the safeguards and
protective measures for property owners during the business rescue
process. It will be published in the following issue of this journal.
Parts of this article are based on a paper delivered at the
International Symposium on Company Law hosted by the Department of Trade and Industry
and the Specialist Committee on Company Law in August 2015.