The law relating to executory contracts in South Africa during business-rescue proceedings
Authors Clement Marumoagae
Affiliations: Senior Lecturer, University of the Witwatersrand, School of Law Johannesburg
Source: Journal of Corporate and Commercial Law & Practice, The, Volume 3 Issue 2, 2017, p. 31 – 51
This paper discusses section 136(2)(a) of the Companies Act 71 of 2008 in relation to executory contracts that a company, placed under business rescue, is party to. It evaluates the business—rescue practitioner’s authority to cancel or suspend obligations arising from these executory contracts after the commencement of these proceedings. This paper highlights the dangers related to the Business Rescue Practitioner’s broad discretion afforded by this section. It is argued that there was no need to differentiate between the common—law powers of the trustees and liquidators and the statutory powers of the business—rescue practitioner regarding executory contracts. It further illustrates that there are no useful guidelines on how the business—rescue practitioner ought to exercise his or her discretion when deciding to either suspend or cancel certain obligations arising from executory contracts that companies under business rescue are party to.