Description
Question: 1
Barbara is a business rescue practitioner of Thirsty Elephants (Pty) Ltd, a company that is under business rescue. She convenes a meeting of the creditors of Thirsty Elephants (Pty) Ltd to discuss and vote on the business rescue plan. The business rescue plan contains ample provisions that protect the interests of the secured creditors of Thirsty Elephants (Pty) Ltd. Winelands Packers (Pty) Ltd, a secured creditor of Thirsty Elephants (Pty) Ltd holding 27% of the creditors’ voting interests that are voted at the meeting, votes against the adoption of the business rescue plan. All the other secured and unsecured creditors in attendance at the meeting vote for the adoption of the business rescue plan as the plan presents certain advantages to them. Barbara is concerned that Winelands Packers (Pty) Ltd’s vote against the adoption of the business rescue plan is detrimental to the successful rescue of Thirsty Elephants (Pty) Ltd, the interests of its employees and the interests of the other affected creditors.
With reference to the Companies Act 71 of 2008 and the relevant case law, advise Barbara on whether she may successfully apply to a court to set aside the vote of Winelands Packers (Pty) Ltd. In your advice, you should discuss the grounds on which such an application may be made, the factors that the court should take into account when considering such an application and the effect of a court setting aside Winelands Packers (Pty) Ltd’s vote.
Question: 2
Catalyst Holdings Ltd is a company that invests in property, insurance and banking businesses. According to its consolidated financial statements, its business undertaking consists solely of its shareholdings in three companies, as follows:
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It holds 70% of the ordinary shares in Tyrex Properties Ltd, the fair value of which is R5.5 billion Rand.
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It holds 100% of the ordinary shares in RIS Insurance Ltd, the fair value of which is R500 million.
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It holds 25% of the ordinary shares in ATM Bank Ltd, the fair value of which is R2 billion.
The board of directors of Tyrex Properties Ltd makes an announcement that Tyrex Properties Ltd will sell all its business operations and assets to a third party for a cash consideration of R6 billion (“the proposed transaction”). Tyrex Properties Ltd gives notice to its shareholders of a general meeting to be held on 15 November 2024, at which a resolution will be put to the shareholders of Tyrex Properties Ltd to consider and approve the proposed transaction.
Robyn, who holds 3% of the shares in Catalyst Holdings Ltd, is dissatisfied with the proposed transaction. He is of the view that the offered cash consideration of R6 billion is significantly lower than the market value of Tyrex Properties Ltd’s business operations and assets. He is concerned that even though he is not a shareholder of Tyrex Properties Ltd, the proposed transaction will have a significant negative impact on the value of the shares that he holds in Catalyst Holdings Ltd.
With reference to the Companies Act 71 of 2008, case law and the facts provided:
2.1 Identify the type of transaction that is proposed in the scenario above. (2)
2.2 Explain whether Catalyst Holdings Ltd and Tyrex Properties Ltd are related. (2)
2.3 Advise Robyn on whether he would be entitled to vote in regard to the proposed transaction or to seek the appraisal remedy in the event that the board of directors of Tyrex Properties Ltd proceeds to implement the proposed transaction.
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