The safeguards and protective measures for property owners during business rescue

Authors Maleka Femida Cassim

ISSN: 1996-2185
Affiliations: Associate Professor, Mercantile Law Department, University of Pretoria; Attorney and Notary Public of the High Court of South Africa.
Source: South African Mercantile Law Journal, Volume 30 Issue 1, 2018, p. 40 – 70


It is an undeniable dilemma for a landlord or property owner to find its property in the possession of a company under business rescue. Not only does the tenant often remain in occupation of the leased premises during business rescue, but additionally fails to make ongoing payment of rent. The goals of business rescue must be carefully balanced with the prejudice caused to property owners by virtue of the moratorium during business rescue. The moratorium encroaches on the proprietary rights of third parties, who are unable to recover their property from a company during business rescue. My earlier article — MF Cassim (2017) 29/3 SA Merc LJ 419—focused on the effect of the moratorium on the property owner. The present article focuses on the protective measures available, and which ought to be available, for property owners whose property is in the possession of a company under business rescue. The safeguards built into the Companies Act 71 of 2008 for property owners are discussed. Guiding principles are proposed for the lifting of the moratorium in business rescue by both the courts and business rescue practitioners, first, for the repossession of property by the property owner, and second, for the recovery of current rent and other compensation by the property owner during business rescue. Whether post-commencement claims for rent have, and should have, a superpriority status as post-commencement finance or as an expense of the administration is also considered.