Business rescue and the position of suretiesCompany law - Business rescue proceedings - The position of sureties


In Investec Bank v Bruyns [2012] JOL 28420 (WCC), the High Court addressed, amongst other things, the position of sureties in relation to business rescue proceedings.

A company can be placed under business rescue in accordance with Chapter 6 the Companies Act, 2008. This establishes a moratorium for the company against the claims of its creditors and enjoins the appointed business rescue practitioner to formulate a plan for presentation and acceptance by a prescribed majority of creditors and other parties with voting rights.

In the case at hand, the business rescue practitioner included a provision in his plan whereby the creditors who held suretyships against the executive directors of the company were precluded from claiming against the directors in accordance with such suretyships. The business plan was accepted. When the sureties were summonsed, they raised a defence that creditors of the company were precluded from claiming against them.


The High Court held that the Companies Act, 2008 did not afford protection to parties who had signed as sureties for a company that had gone under business rescue.

In light of the judgment, it is advisable for creditors who hold deeds of suretyship not to agree to any arrangement whereby sureties try to claim protection in circumstances where their companies are under business rescue. Where the business rescue practitioner tries to force the position by putting this to the vote as part of the business rescue plan, it is advisable for any creditor holding a suretyship to object vehemently and to require that his or her objection be noted, whatever the outcome of voting. This will enhance the creditor’s position against sureties in the circumstances described above.

our services

Commercial Law

The firm advises businesses on how to work effectively in a financial environment that is heavily regulated. We help businesses to deal with the many requirements of the law.

read more
Public Law

We advise public entities on how to manage the obligations arising from public law. The firm helps clients within the public sector to meet the demands of a complex legal framework.

read more

Conveyancing and general property advice, legal assistance in land matters, agricultural and rural development, evictions, expropriations, land disputes

read more
Labour Law

The firm advises on all aspects of labour law, including interpreting and applying legislation, to preparing and implementing employment contracts, to court proceedings and more.

read more

Estate planning and administration of estates, preparation of wills, structuring and registration of trusts, advice on tax implications, winding up of estates.

read more
Further Services

We offer an array of services, that include Company Secretarial services, Family Law services and Litigation services.

read more