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Tongaat Hulett appears to be inching its way towards liquidation as the (currently suspended) JSE-listed sugar producer and property developer’s business rescue process increasingly becomes bogged down by legal challenges.
This follows the High Court in Durban last week hearing three urgent applications and ordering:
The applications launched against Tongaat and its business rescue practitioners (BRPs) by RCL Foods Sugar & Milling and the South African Sugar Association (Sasa) were for interdicts to stop the Tongaat creditors meeting from taking place.
This meeting was meant to consider and vote on the business plans of short-listed bidders RGS Group Holdings Limited and Robert Gumede’s Vision Group, pending the determination of Part B of their applications to declare these business plans unlawful.
RGS is seeking an order that the BRPs must convene the creditors meeting on Thursday to vote on its amended plan.
These two business rescue plans will now be voted on in January 2024.
Judge Rashid Vahed on 4 December 2023 dismissed an application by Tongaat’s BRPs to declare that they were empowered to suspend any obligation by Tongaat, including redistribution payments and levies arising from the Sugar Industry Agreement for the duration of its business rescue proceedings.
Tongaat was placed in business rescue on 27 October 2022 and owes about R1.1 billion in statutory levy payments.
Judge Vahed said Tongaat’s ongoing obligations to Sasa “are simply the costs of doing business”.
“They cannot be suspended and are not subject to the moratorium. This is a consideration which the practitioners ought to take into account when determining whether the business is capable of rescue or whether a better return will result in liquidation,” he said.
The BRPs have given notice to appeal this judgment and planned to continue with a meeting of creditors on 14 December 2023 to consider and vote on Tongaat’s amended business rescue plans but were prevented from doing so by High Court interdicts.
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Last year, six former Tongaat Hulett Senior executives were charged with fraud amounting to a staggering R3.5 billion.
