- July 1, 2022
- |Civil Law, Practice, And Procedure, Concise Law Reports (CLR)
CIVIL PRACTICE – PROVISIONAL LIQUIDATION OF CLOSE CORPORATION FOR FAILING TO PAY DEBTS
The applicant launched an application whereby it sought the provisional liquidation of the respondent on the grounds that the respondent was unable to pay its debts and relied on s 68(1)(c) of the Close Corporation Act, 26 of 1988. The root of the application stems from a credit facility, whereby the applicant sold wheels and tyres to the respondent. The respondent allegedly breached the payment obligation to the applicant. The respondent opposed the application and in doing so raised three points, being firstly that the applicant failed to show that the respondent was indebted to it, secondly, that the respondent was unable to pay its debts as contemplated under s 68 of the Close Corporations Act and finally that the applicant failed to comply with s 69(1)(a) of the Close Corporations Act.
PRINSLOO J discusses the provisional liquidation of CCs; being unable to pay debts in terms of section 68 (1) (c); the onus to show indebtedness and the consequences of failure to prove same in provisional liquidation proceedings (section 69 (1)(a), and held that.
- The provisions of s 69(1)(a) of the Act are peremptory in requiring service of the demand by delivering it at the registered office of the corporation and had the legislature intended to sanction other forms of service it would have made provision for them.
- strict compliance regarding service was a prerequisite for deeming the corporation to be unable to pay its debts.
- The applicant failed to make out a prima facie case for the granting of a provisional order of winding up of the respondent on the ground that the respondent was unable to pay its debt.
TiAuto Wholesalers (Pty) Ltd v Van Rensburg Holdings CC NAHCMD 1 July 2022