Application for Business Rescue, Intervening Creditors and the factors to take into consideration

Riaan Anton Swart (Applicant) / Beagles Run Investments 25 (Pty) Ltd (Respondent), Firstrand Bank Ltd (1st Intervening Creditor), Bridging Advances (Pty) Ltd (2nd Intervening Creditor); Bideasy Auctions CC (3rd Intervening Creditor) & Glacis Game Breaders (Pty) Ltd (4th Intervening Creditor) (26597/11) (GNP)

Riaan Anton Swart (“Swart”) launched an application for Beagles Run Investments 25 (Pty) Ltd (“Beagles Run”) to be placed under supervision in terms of the provisions of section 131(4)(a) of the Companies Act 71 of 2008 (“Companies Act”) and for the commencement of business rescue proceedings.

Firstrand Bank Ltd, Bridging Advances (Pty) ltd and Bideasy Auctions CC (“Bideasy”) have intervened as creditors and are opposing the application for business rescue with Firstrand Bank Ltd seeking an urgent winding up order in respect of Beagles Run. Glacis Game Breaders (Pty) Ltd (“Glacis Game”) concluded an agreement with Firstrand Bank Ltd and purchased its right, title and interest in respect of Beagles Run. Firstrand Bank Ltd accordingly withdrew its liquidation application. Glacis Game is seeking an order that the application be postponed for three months alternatively that the Respondent be placed under supervisions in terms of section 131(4)(a) of the Companies Act and that business rescue proceedings commence.

Beagles Run is a chartering business and deals in exotic wild life species.

Bridging Advances obtained judgment against Beagles Run and sold two of its aircrafts on auction. An amount of R11,000,000.00 with interest at R14,000.00 per day is still owed by Beagles Run to Bridging Advances. Bideasy was the auctioneer in the sale of the two aircrafts and is still owed R45,000.00 in respect of the legal fees incurred when opposing Swart’s application to stop the sale of the aircraft. Glacis Game is owed R3,100,000.00 by Beagles Run.

The purpose of business rescue proceedings is to assist a financially distressed company by means of a business rescue plan as contemplated in section 150 of the Act, in order to maximise the possibility of the company continuing on a solvent basis, or to achieve a better return for the company’s creditors or shareholders in comparison to a liquidation.

The total purchase price for Beagles Run’s assets is R15,000,000.00, but Beagles Run’s total indebtedness is R16,148,000.00. The only other asset is a loan account of some R72,343,000.00 where monies have been lent to a related company known as Biz Africa 111 (Pty) Ltd of which the Swart is the sole director. Beagles Run’s total assets amount to R87,843,000.00 while the admitted liabilities are R16,148,000.00 and a shareholder’s loan of R165,517,000.00.

Bridging Advances is in possession of the King Air aircraft as well as the Bell helicopter which means that they will not be available for use in the charter business.

There is absolutely no basis for contending that Beagles Run will be able to carry on business on a solvent basis or that there is any prospect thereof. The application for business rescue was therefore unsuccessful.