Bibliographie sélective OHADA

Post-commencement financiers provide a lifeline to companies under business rescue and these financiers have their best interest in the survival of these companies. Should it be that the business rescue plan is unsuccessful, the chances are that the post commencement financiers will be the largest creditors. In Wescoal Mining (Pty) Ltd v Mkhombo NO, a dispute arose regarding the appropriate adoption of a business rescue plan during the meeting. One critical legal issue was whether the Companies Act bestows voting rights exclusively to the company's creditors who existed at the initiation of business rescue, or if creditors accruing after the commencement may also partake in voting on the plan. Following an assessment by Judge Wilson, it was established that only creditors with claims predating the commencement were eligible to participate in the voting process. Subsequently, Judge Wilson believed that section 135 of the Companies Act places post-commencement financiers as creditors in a different class and provides for their protection and interests in a different way. Against this background, the dissertation evaluates the position of post-commencement creditors when it comes to voting on a business rescue plan.

This dissertation on the relationship between the business rescue practitioner and the directors of the company under business rescue. In essence, this dissertation investigates whether a conflict arises between the duties, roles and powers of the business rescue practitioner and those of directors of the financially distressed company. The aim of this dissertation is to study what are the limitation on duties, roles and powers of directors of the company as a result of the appointment of the business rescue practitioner and the extent thereof. In achieving the above objective, this dissertation commences with setting out the background of business rescue proceedings in South Africa by analysing provisions of Chapter 6 of the Companies Act 71 of 2008 which has introduced “a new corporate rescue procedure” in South Africa, being business rescue. The focus is on provisions dealing with duties, roles and powers of directors in the ordinary course as set out in section 66, 75 to 77 of the Act. The focus then shifts to the provisions dealing with the commencement of business rescue proceedings, the appointment of the business rescue practitioner and his duties, roles and powers. In order to establish whether a conflict truly exists between the duties, roles and powers, various sources dealing with this issue are considered. In order to assess whether there are solutions in dealing with the conflict and/or limitation that arises, this dissertation includes a comparative study on selected foreign jurisdictions dealing with the interaction between the board of directors and business rescue practitioner are considered. In particular, this dissertation considers corporate rescue mechanisms in the Commonwealth of Australia, the United Kingdom and the United States of America. The purpose of the comparative study is to determine which lessons can be learned from the practices in the aforementioned jurisdictions. The overall objective of this study is to determine how the South African legal framework pertaining to the interaction between directors and business rescue practitioners can be enhanced.

Environmental reclamation obligations are statutory mechanisms designed to regulate environmental protection by corporate entities. Bankruptcy laws on the other hand are meant to offer insolvent corporations an opportunity to reorganize their affairs, satisfy creditors claims and make a fresh start. In practice, the application of bankruptcy laws can undermine key environmental reclamation objectives, leading many to ask whether a corporation undergoing restructuring with significant outstanding environmental reclamation obligations should be able to commence bankruptcy proceedings to satisfy creditors’ claims? By employing the doctrinal and comparative research methodologies, this research interrogates that inquiry. It argues that, despite the importance of bankruptcy protection for corporations undergoing financial distress, environmental protection should be paramount. Although sustainable finance (SF) instruments have been deployed by banks to enable creditors to mitigate environmental concerns in their investments, the persistent recurrence of environmental reclamation issues in the oil and gas sector particularly during insolvencies, underscores the need for financial investors to strengthen their investment policies to reflect best practices providing the desired protection for the environment. The research finds that, although SF and environmental, social and governance (ESG) approaches, are commendable, they are insufficient in instilling adequate regulatory impact on the environment compared to judicial control offered by the courts. The thesis concludes that whilst judicial control mechanism is not without concerns, with government’s deliberate financial policy and judicial control to complement SF and ESG efforts, ESG and SF mechanisms can be strengthened to compel greater significant influence on best practices in lending.

The procedure of liquidation of assets can be closed for the extinction of liabilities or for insufficient assets. The court may then, at the request of any interested person or ex officio, at any time during the proceedings and after a report by the official receiver, close the proceedings. In case of insufficiency of assets, the business disappears and, perhaps, the hope of any payment to creditors as well. For a long time, it was accepted that the closure for lack of assets allows creditors to resume individual proceedings against the debtor, especially if the latter returns to better circumstances. This traditional solution has been abandoned. According to OHADA Uniform Act on the organisation of collective procedures for the settlement of liabilities, revised on 10 December 2015, closure for insufficiency of assets no longer automatically gives creditors the right to take individual action. Thus, when a liquidation leads to a shortage of assets, the satisfaction of creditors remains uncertain. The objective of this study is to show that despite this reform, the protection of creditors’ rights has not changed significantly in the event of insufficient assets. Indeed, any possible recourse to the recovery of their claims remains paralysed by certain measures that infringe their rights. The infringements can be described as severe or moderate depending on the case.

This thesis evaluates the strengths and weaknesses of the legal framework on corporate rescue in South Africa and Uganda. Although corporate rescue was initially not one of the objectives of insolvency law, it has now become the focus of modern insolvency law. South Africa became the first country to recognise the need to create a legal framework for rehabilitating financially distressed companies when it incorporated judicial management in the Companies Act of 1926. Judicial management was, however, not successful as a corporate rescue procedure. The South African policy makers however continued to explore ways through which financially distressed but viable companies could be saved from collapsing. This culminated into the introduction of business rescue in Chapter 6 of the Companies Act 71 of 2008. The study presents a detailed analysis of the strengths and weaknesses of the South African business rescue framework. It posits that unlike the Ugandan system, the South Africa legal regime reflects the principles of a modern and effective corporate rescue system. Whereas the government of Uganda attempted to embrace corporate rescue through the introduction of administration in the Insolvency Act 2011, the law is devoid of the internationally recognised features of a modern and effective business rescue framework. Administration has remained a white elephant in Uganda’s insolvency system, with liquidation continuing to be the predominant procedure used by both creditors and financially distressed companies. It is recommended that Uganda’s policy makers should benchmark the South African system to reform Uganda’s corporate rescue framework. This thesis is based on the law as at 31st of May 2022, found in the sources available in South Africa and Uganda.

The trend for multinational companies has been a preference to forum shop rather than to open insolvency proceedings in developing countries. The US and the UK are prime venues for such bankruptcy tourism enabled by long-arm jurisdiction through extraneous connection. At the same time, there has been a pattern in developing countries of insolvency law reforms which have been circumvented when multinational companies forum shop. Using doctrinal and comparative methodologies, this thesis examines how forum shopping and long-arm jurisdiction to the US and UK affect the efforts of developing countries to reform their insolvency laws and their possible effects on local stakeholders of multinational companies in developing countries. Additionally, the thesis proposes a longer-term strategy of dealing with forum shopping and long-arm jurisdiction by using the concept of centre of main interests ('COMI') as the basis for opening main insolvency proceedings. To ensure that the proposed insolvency procedural legal law is implemented uniformly, the thesis proposes the creation of a supranational court from which national courts, insolvency practitioners and multinational companies can request clarifications on the provisions of the proposed insolvency procedural legal framework. The thesis identified that developing countries require effective insolvency laws and institutions and highlighted key principles that should be included in the reforms. The hope is that developing countries can improve their insolvency laws and institutions to a global standard. Once the proposed insolvency procedural legal framework is implemented, multinational companies will be encouraged to utilise them once jurisdiction is identified through the COMI test rather than forum shopping.

Insolvency and business recovery laws in Nigeria have not evolved to incorporate reorganisation, reforming insolvent oil firms' operations to boost commercial oil firms' steadiness and economic suitability like other moderately developed countries. In Nigeria, liquidation is understood by many as the panacea to indebtedness. The research evaluates the Nigerian insolvency and business recovery legal regime to sustain indebted oil firms from economic shocks due to the global decline in the oil price to avert imminent business failures due to insufficient cash flows. The aim is to fill the gaps in Nigeria's insolvency and business recovery laws by recommending a model for the sustenance of oil firms and to suggest the reform of the gaps identified in the existing laws and the extant literature on the subject. The paper opted for conceptual legal review, comparative legal and policies analyses of solvency and business recovery legislations in Nigeria, Malaysia, India, South Africa, the United Kingdom and the United States. These nations were designated for this study because their insolvency and business recovery legal regime are business rescued driven, not winding up centred. The study is library research-based to address some of the flaws in Nigeria's insolvency and business recovery laws. The study finds that Nigerian legislation on insolvency is flawed in oil firms' salvage, improvement and rearrangement. It ends that, statutory bodies in the designated case study nations are efficient than those in Nigeria due to the strong political will of their governments in supporting insolvent oil firms for successful financial recovery, to safeguard jobs, to protect creditors and to enhance the wealth of their nations through sound business recovery policies and laws. The study, advocates, remodel of Nigeria's insolvency and business recovery legislations and policies in compliance with the international standards on insolvent oil firms salvaged and creditors focused policies for a robust economy. The study concludes with the recommendation for further study to consider quantitative analysis research methodology to project further scholarship on the subject.

This contribution considers the legislative regulation of the job security (which boils down to preservation of employment) of employees in case of financial distress of a company. It juxtaposes the legislative regulation of four interrelated processes a company may engage in where it finds itself in financial distress, namely a voluntary internal restructuring (especially retrenchment), the transfer of the business or part of the business, business rescue and winding up. The legislative endeavour to preserve the job security of employees in all these processes is described and analysed. The discussion shows that room exists for companies to circumvent this protection and, to the extent that the protection does apply, that it remains difficult for employees to ultimately challenge the substance of decisions negatively affecting their job security. The main protection for employees in all these processes is procedural in nature and to be found in their rights to be informed of and consulted prior to decisions negatively affecting them. In this regard, business rescue is the most employee-friendly process. Participation in this process by employees, however, requires a fine balance as it may be self-defeating and lead to winding up and the permanent loss of jobs.

The research aims to evaluate the adequacy of the insolvency system in Libya to support the national desires and objectives identified in the country to enhance the national economy and to maintain social stability. The thesis considers the need for reform in the current business insolvency and rescue framework taking into account the country’s domestic circumstances. To conduct this evaluation, the research reviews the Libyan insolvency law by examining the theoretical approaches to corporate insolvency laws in order to understand the role that should be played, or the goal that should be reached, by the insolvency law. This is important to identify whether the insolvency and rescue laws should be concerned only about maximising economic interests or should be concerned also about wider societal interests and objectives. The study also undertakes an in depth evaluation of the current business insolvency and rescue framework by using the international benchmarks with particular reference to the UNCITRAL Legislative Guide on Insolvency Law. The thesis establishes that the current insolvency law is insufficient to promote the economic and social goals of the country because of both the deficiency of the legislative framework and inefficient institutions. The investigation reveals also that an application of the social justice theory as traditionally perceived by the Civil Code 1953 (as manifested in property law and contract law) that is primarily designed to achieve social goals (for example, the priority given to the wide-ranging category of privileged creditors over secured creditors) prevents the insolvency law from achieving the sought-after objectives leaving much to be desired for a reform. The research builds on these foundations to identify challenges and impediments to the development of the insolvency and rescue regime of Libya.

Ever since the formation of limited companies became permissible, unsecured creditors have faced a Sisyphean struggle to regularly recover substantial levels of the debts owed to them should corporate creditors enter insolvency. These low recovery rates result in many issues for lenders, including large losses, and in some cases, the insolvency of the lender themselves. The causes of these low return rates are long established and clearly demarcated. They consist of the existence and widespread use of security interests - which remove the majority of the company’s assets upon insolvency occurring - and the statutory priority of distribution, which ensures that parties other than the unsecured creditors have their debts discharged first by the liquidator from the already insufficiently resourced asset pool. English insolvency law has sought to provide some protection to the unsecured creditors through the anti-deprivation and personal liability provisions of the Insolvency Act 1986, which are intended to protect the integrity of the insolvent company’s asset pool. However, as concluded by this thesis, these provisions fail to afford adequate protection as a consequence of their substantive, evidential and remedial limitations, potentially resulting in the distributable assets being misappropriated and out of the reach of unsecured creditors. This thesis therefore analyses the limitations of the existing anti-deprivation and personal liability provisions before concluding as to how and why they fail to adequately protect unsecured creditors. This is done through a doctrinal and theoretical analysis of the provisions, before these conclusions are then tested empirically in two case studies. Given the inadequate protection provided by the Insolvency Act, this thesis then analyses the resulting trust – on which little analysis has been conducted in the context of insolvency – to determine whether it is capable of assisting unsecured creditors to increase their liquidation return rates. This increase is achieved through returning assets beneficially owned by the company to the company, or by preventing parties from becoming unsecured creditors in the first place by removing assets beneficially owned by them from the company. This analysis too will adopt a doctrinal and theoretical methodology, and it is concluded that the resulting trust is able to assist should the requisite factual matrices occur.

Chapter 6 of the companies Act has attempted to resolve problems created by the ineffectiveness of judicial management which has failed to provide suitable alternative to the liquidation. The process of business rescue proceedings has made some impact on the liability of sureties in so far as it relates to creditors. Moratorium has been imposed once the business rescue proceedings commences and therefore the principal debtors are protected against any legal action unless the court or business rescue practitioner has consented thereto. The question is what is the impact of the business rescue proceedings on the rights of creditors against the sureties of the company under business rescue proceedings and what is the judicial position in so far as it relates to liabilities of sureties during business rescue proceedings, finally what is the position of comparative law in respect of other foreign Jurisprudence terms of business rescue proceedings and the liability of sureties. The South African Companies Act does not regulate the situation of creditor’s rights against sureties of a financially distressed Company. In terms of American law, the situation is different. Creditor’s rights against non-debtors (including sureties) is regulated by Bankruptcy Codes. In terms of bankruptcy codes, the discharge of a debtor does not affect the liability of the nondebtors or other entities. There are divergent views in terms of South African Court decisions in respect of liability of sureties. Some Judges believe that the commencement of business rescue proceedings does not affect the liability of sureties and others are of the view that the beginning of business rescue proceedings releases sureties from their obligations towards creditors unless business rescue plan or deed of suretyship provides otherwise. It is therefore recommended that our legislature introduces some new sections into the companies act. One Section should be similar to section 524(e) of the bankruptcy codes which expressly states that a discharge granted to the principal debtor does not affect the liability of sureties towards creditors. Another section should be similar to section 105(a), which provide courts with powers to make any order to realize the objectives of the companies act. This to avoid conflicting courts decisions on this issue.

Interrogation proceedings in insolvency circumstances have always been a thorny issue in South Africa, even prior to the advent of the new constitutional democracy. After the adoption of the new Constitution in 1993, a number of court cases seeking adjudication on constitutional compliance came before our courts. The insolvency of both natural and juristic persons necessitates the employment of specified proceedings such as insolvency interrogations. The latter is done to enable an efficient and effective collection and collation of information that would assist in the administration, sequestration and winding-up of the affairs of the affected person. These proceedings are intended to benefit creditors of an insolvent (natural and juristic). The matters of Ferreira v Levin; Vryenhoek v Powell 1996 (1) SA 984 (CC) (1996) (1); Bernstein and Others v Bester 1996 (2) SA 751 (CC); Harksen v Lane 1998 (1) SA 300 (CC; De Lange v Smuts 1998 (1) SA 736 (C) are still leading cases in relation to the constitutionality of interrogations in insolvency circumstances. The Constitutional Court has on a number of occasions, declared the interrogation proceedings in insolvency matters constitutional, with minor amendments on a case-by-case basis. The effect of these judgements is that, in every case in which an insolvent debtor has to undergo an interrogation process, the presiding officer must ensure that compliance with the constitutional requirements are in place. The current position in which the sequestration of insolvent estates and the winding-up of insolvent companies are respectively regulated by two statutes, is a matter for concern. This situation has led to duplication and contradictions in the two statutes. Further, the absence of specialist tribunals or officers dedicated to the administration of insolvency related matters is a further hurdle to the effective and efficient finalisation of the affairs of insolvent estates or insolvent companies’ affairs. The matter of Leong comes to mind. In this case, the Master of the High Court issued a warrant of arrest for a witness who was subpoenaed to appear at the meeting of creditors in his insolvent estate. This was the case, despite the fact that Leong had previously submitted a medical certificate to the effect that he was unable to attend the meeting due to illness. This case is a clear indication of a lack of proper guidelines to deal with insolvency related matters - for non-judicial officers (such as the Master of the High Court). This incident took place in 2016, long after the decision in De Lange v Smuts 1998 (1) SA 736 (CC). Interrogation processes in insolvency circumstances in Namibia and Botswana are almost similar to South Africa’s processes. Divergent provisions in Namibia and Botswana exist, but not to a great extent. Like South Africa, the above-mentioned jurisdictions adopted a constitutional democracy long before South Africa. One would have expected that interrogation proceedings in insolvency circumstances would be in line with human rights. Further, as is the case in South Africa, insolvency of natural persons and of juristic persons are regulated by two separate statutes in these jurisdictions. This thesis investigates issues relating to the interrogation process in insolvency proceedings in the three SADC countries, namely South Africa, Namibia and Botswana. It compares the position to two foreign jurisdictions, namely England and Canada – as leading jurisdictions in human rights. Thereafter, suggestions on processes and methods of information gathering in line with human rights and in specialist tribunals will be made. In addition, recommendations for inclusion in a unified statute regulating insolvencies of both natural and juristic persons will be made. This will be done taking into consideration the economical and socio-political circumstances of South Africa and the SADC countries forming part of this thesis.

Whenever legal disciplines overlap interesting scenarios occur and differences in opinions create intellectual tension. One such interesting scenario occurs when employees’ rights are affected during a company’s liquidation or business rescue. The employees of a company are normally the last persons to find out that a company is struggling financially. They are also the only stakeholders who are in no position to negotiate their risk should the company be liquidated. It is therefore necessary to evaluate the rights given to employees during a company’s liquidation and business rescue. The fundamental ideologies of company law, insolvency law and labour law are challenged and examined to attempt a harmonizing result that respects the core of each discipline. It is crucial to determine whether an appropriate balance is struck between the interests of all the stakeholders of the company during these procedures. The aim of this thesis is to evaluate whether South Africa manages to strike this balance. If employee rights are protected whilst a company is restructured back to solvency and success, this balance will be struck. An evaluation will also be made whether employees are always better protected during business rescue than in liquidation. The study analyses employee rights in a company’s liquidation and during a company’s restructuring process. The comparative study of employee rights in liquidation and rescue is done with the jurisdictions of Australia and England – countries with similar procedures. Important conclusions show that South Africa protects employee rights during business rescue procedures the best. An appropriate balance is indeed struck between the interests of all stakeholders of a company during business rescue procedures and employees are most of the time better off after a restructuring than in a liquidation. Should the recommendations for law reform be implemented in our legislation, South Africa will overcome the few obstacles currently in its way to be seen as a world leader where employee rights are concerned in liquidation proceedings as well as business rescue.

Alarmed at the ease with which global bankruptcy jurisdiction can be engineered in the US through a combination of the Bankruptcy Code’s low bar to entry and the worldwide effects of a bankruptcy case, critics argue that the US promotes abusive bankruptcy forum shopping and harmful imposition of US norms on overseas stakeholders. This article advances a revised account of US bankruptcy jurisdiction over non-US debtors from a distinctively Anglo-American standpoint. The article’s central thesis is that critics overemphasise formal jurisdictional rules and pay insufficient attention to how US courts actually exercise jurisdiction in practice. It compares the formal law ‘on the books’ in the US and UK for determining whether or not a domestic insolvency or restructuring proceeding relating to a foreign debtor can be maintained in each jurisdiction and provides a functional account of how US bankruptcy jurisdiction over foreign entities is exercised in practice using the concept of jurisdictional congruence as a benchmark.

The focus of this study is the protection of creditors’ rights in South Africa’s statutory business rescue regime provided for in Chapter 6 of the Companies Act 71 of 2008. In this analysis, three issues in particular are addressed in depth. The first is the creditors` power to initiate the business rescue process. The second is the position of creditors between the commencement and the termination of the business rescue process. The third issue is to suggest (on the basis of experience drawn from reported case law and academic criticism of the current business rescue statutory provisions) an improved model that will more effectively safeguard creditors’ rights in South Africa’s business rescue regime. In exploring these issues, I give a critical review of pertinent literature. With respect to the first issue, I conclude that the legislative provisions granting creditors the right to seek a court order initiating the business rescue process are open to criticism. By contrast, a resolution of the board of directors for the commencement of business rescue is a simpler route. With regard to the second issue I conclude that the company’s creditors have considerable influence in the business rescue process. Overall, the current statutory business rescue regime is intended to give a voice to all major stakeholders in the company’s continued solvent existence. In the event of certain irresoluble disputes in the course of that process, the judiciary has the final say. A substantial number of judicial decisions have provided interpretations of the statutory provisions, and the trend has been to try to restore financial ailing companies to solvency and viability where there is a reasonable prospect for success in this regard. In my conclusion, I propose a legislative model that seeks to strike an optimum balance between the competing and sometimes conflicting interests of the various interested parties and I suggest reforms directed at enhancing the protection of creditors’ rights. This thesis takes account of South African legislation and legislative amendments as at 31 December 2016 and of decisions of the South African courts up to and including those handed down during April 2017 and reported in the saflii on-line law reports. Since a substantial part of this thesis was written from outside South Africa, the author relied heavily on the safllii data base of judgments of the South African courts, rather than on hard copy law reports which take time to reach their destination by post.

IRep - Nottingham Trent University's open access institutional research repository

IRep - Nottingham Trent University's open access institutional research repository

This contribution focuses on the development of bank resolution regimes as a credible antidote to the ‘too big to fail' problem. The main objective of the analysis is to demonstrate the repercussions and challenges resulting from the implementation of bank resolution schemes on a cross-border level. This work is a selective survey of specific legal questions, which remain relatively unaddressed by academic literature and international standard-setting bodies (e.g. bank resolution triggers or safeguards for bank creditors under bank resolution) or still problematic (e.g. resolution planning or cooperation and information exchange between resolution authorities), in particular when applied in a cross-border context. The author aims to shed more light to the complexities of cross-border bank resolution while trying to answer to the fundamental question: have we ended the ‘too big to fail' problem?

This thesis explores three important issues in financial distress and corporate bankruptcy: bankruptcy venue choice and creditor recovery, the efficiency of Chapter 11 corporate bankruptcy and distressed exchanges, and the bankruptcy ripple effect on peer firms’ investment policy.