Companies Act 2011 and Insolvency Proclamation 1957 - do they provide for provisional liquidators? - Is there provision for first meeting of creditors to proof claims and elect liquidators?
IN THE COURT OF APPEAL OF LESOTHO
HELD AT MASERU
C of A (CIV) NO.: 23/2019
In the matter between:
LIQUIDATORS OF THOTANYANA MINING
& CIVIL WORKS (PTY) LTD (in liquidation) APPELLANT
MRS M VILAKAZI 1ST RESPONDENT
OF THE HIGH COURT 2ND RESPONDENT
MASTER OF THE HIGH COURT 3RD RESPONDENT
THE ATTORNEY-GENERAL 4TH RESPONDENT
FIRST NATIONAL BANK
LESOTHO LIMITED 5TH RESPONDENT
BANK LIMITED 6TH RESPONDENT
Coram: PT Damaseb, AJA
Enrolled: 13 May 2020 (For determination by way of written submissions in terms of CA President’s COVID-19 PD 2020).
Delivered: 29 May 2020
PT Damaseb AJA:
‘(a) That it was within the Master’s power to make the rulings in question;
(b) That the applicant liquidators opted to release the FNB financed vehicles to the 5th Respondent during December 2014;
(c) That the 5th Respondent was, at the time of the alleged release of the FNB financed vehicles, the owner of the vehicles;
‘(1) The Master of the High Court may from time to time be called upon to make rulings and findings with regard to a company in liquidation and it is the role of that office to do so.
(2) The Companies Act 2011 makes no mention of a provisional Liquidator but the Liquidator and Master of the High Court are required to comply with the Insolvency Proclamation …regarding meetings of creditors.
(3) The Hire-Purchase owners of a property are secured creditors, but should they realise the proceeds of a sale of any of such assets the funds must be paid over to the Liquidators to be dealt with in the liquidation and distribution account.
(4) The Liquidators have the right to take expert legal advice without the authority of the Master or the Creditors.’
The Banks’ purported cross-appeal
“A secured creditor may –
Grounds of appeal considered
‘(2) If the Court is satisfied that it is necessary or expedient for the purpose of maintaining the value of assets owned or managed by the company, appoint a liquidator; otherwise the Court shall direct the Master to appoint the liquidator.
(3) The appointment of a liquidator by the Court under subsection (2) shall be subject to confirmation by the Master.
(4) Before confirmation by the Master, a liquidator appointed by the Court shall have the rights and powers, duties and entitlements of a liquidator, unless the Court limits the powers or imposes conditions on their exercise.
(5) The Master shall confirm or appoint a liquidator in accordance with the law governing insolvency.’ (My emphasis).
‘As from the commencement of the liquidation of a company-
‘FNB v Thotanyana Mining & Civil Works (Pty) Ltd (CCT/173/2013
Standard Bank Lesotho Bank/ Thotanyana Mining & Civils (Pty) Ltd (CCA/0033?2014
The aforesaid company was liquidated by order of the High Court in the aforesaid application. You are referred thereto that the Court directed that you make an appointment of the liquidators in the estate within 14 days. We represent the major creditors in the estate who are exposed to claims against the estate exceeding an amount of M20 million. On behalf of the creditors we therefore request that you appoint the following provisional liquidators upon the nomination of the liquidating creditors herein:
Me Moroesi Tau
Mr DG Roberts
Mr CB St. C Cooper’.
‘Where the Master ‘’appoints’’ or ‘’nominates’’ a liquidator, that does not preclude the general body of creditors from exercising their right to ‘’elect’’ a Liquidator. It therefore becomes inconsequential whether or not the word ‘’provisional liquidator’’ is found in the Companies Act 2011. In practice, at the first meeting, the Master’s appointment is usually confirmed, but legally the meeting is not obliged to do so and it is not precluded from confirming the master’s or electing a different Liquidator. In any event, the Master is required to take account of the requisitions and wishes of creditors in making the initial appointment in terms of the Act.’
ACTING JUSTICE OF APPEAL
For Appellant: Mr. Q. Letsika
For Respondents: Adv. T. Mpaka (for the 5th and 6th Respondents)
 124.(1) Subject to this Part, the rules in force under the law of insolvency with respect to the estates of persons adjudged insolvent shall apply in a liquidation of a company to -
(2) A person who is entitled to make a claim and receive payment in whole or in part from a company shall be entitled to do so in a liquidation of a company.
(3) In applying rules of the law of insolvency in liquidation a claim by an unsecured creditor admitted by a liquidator shall be treated as if it were a debt proved in accordance with the requirements of the Insolvency Proclamation 1957 or any other law relating to insolvency.
 See s 1(1) of the SA Companies Act 61 of 1973, which defines a ‘’liquidator’’ as including, unless the context indicates otherwise, a provisional liquidator: Ex parte Provisional Liquidators Pharmacy Holdings Ltd 1962 (2) SA 12 (W) 14; Ex parte Contemporary Refrigirator (Pty) Ltd 1966 (2 SA 227 (D) 229.
 Section 129 of the CA 2011 sets out the powers of the liquidator to include ‘the powers necessary to carry out his or her functions and duties’ under the CA 2011 ‘and those provided for under the Insolvency Proclamation’ or any other law relating to insolvency.
 The Companies Act 2011, s 127(5).
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