Court prohibits R100m auction of Bosasa immovable assets
The high court in Johannesburg has declared that any auction of assets of the six African Global Operations companies, formerly known as Bosasa, which were in liquidation before the second meeting of creditors is prohibited.
In a judgment passed electronically on Monday, the court held that any sale while such company was in liquidation, and without written consent by resolution of the board of directors of African Global Holdings, was unauthorised. The court said the transfer and registration of immovable property to any prospective purchaser of assets of any of the six companies that were sold was prohibited.
The court also refused an application to place these six companies in business rescue.
The application followed an auction conducted by Park Village Auctions which sold the assets of the six companies in December last year. The sale raised over R100m.
African Global Holdings launched an application to set aside the sales on December 20 last year. The court held that the provisional liquidators had no authority to continue with the sale of the assets of the six companies from December 3, by operation of the law.
African Global Operations, on behalf of six companies in liquidation, applied to place the six companies in business rescue on December 3 last year. These companies are Operations, Properties Technology Systems, Leading Prospect, Youth Development Centres and Security Intelligence.
On December 4, Park Village Auctions auctioned the assets of the six companies, despite the business rescue application launched by African Global Holdings a day earlier.
The court said a business rescue application suspended the process of continuing with the realisation of the assets of the company in liquidation.
“I add, a business rescue application suspends the process of continuing with the realisation of the assets of the company in liquidation from the moment the application is made,” acting judge DP de Villiers said.
De Villiers said the function of the provisional liquidators remained one of holding and preservation. “They did not become final liquidators who had to wind up the companies in liquidation.”
The court said in law, a liquidator, both final and provisional, may only sell the assets of a company if such authority is granted by a meeting of creditors.
“Despite some success in the auction application the business rescue application still stands to be dismissed.”
The court found that the companies were not viable in respect of which a case has been made out that there is a reasonable prospect for rescuing them. The court found, among other reasons, that the group's existing business model of doing business with the state and state-owned entities had come to a stop and that movable assets of the business had been sold and were unlikely to be recovered.
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