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Companies Act, 2008 (Act No. 71 of 2008)

Chapter 6 : Business Rescue and Compromise with Creditors

Part A : Business rescue proceedings

135. Post-commencement finance

 

(1) To the extent that any remuneration, reimbursement for expenses or other amount of money relating to employment becomes due and payable by a company to an employee during the company’s business rescue proceedings, but is not paid to the employee—
(a) the money is regarded to be post-commencement financing; and
(b) will be paid in the order of preference set out in subsection (3)(a).

 

(2) During its business rescue proceedings, the company may obtain financing other than as contemplated is subsection (1), and any such financing—
(a) may be secured to the lender by utilising any asset of the company to the extent that it is not otherwise encumbered; and
(b) will be paid in the order of preference set out in subsection (3)(b).

 

(3) After payment of the practitioner’s remuneration and expenses referred to in section 143, and other claims arising out of the costs of the business rescue proceedings, all claims contemplated—
(a) in subsection (1) will be treated equally, but will have preference over—
(i) all claims contemplated in subsection (2), irrespective of whether or not they are secured; and
(ii) all unsecured claims against the company; or
(b) in subsection (2) will have preference in the order in which they were incurred over all unsecured claims against the company.

 

(4) If business rescue proceedings are superseded by a liquidation order, the preference conferred in terms of this section will remain in force, except to the extent of any claims arising out of the costs of liquidation.