Before the hearing of the provisional liquidation of Tongaat Hullet Limited (THL) starts in the Durban High Court, there are a few things that interested parties can still do to save the centennial company and 250 000 jobs. The entire sugar eco-system and stakeholders require certainty and a sustainable solution before the insolvency court sits to hear the BRP’s application for provisional liquidation of THL .
It must be considered that the court does not have much of a discretion to grant a liquidation order in respect of a distressed company in circumstances where the business rescue practitioners (BRPs) have already concluded that there is no longer a reasonable prospect of success because of the business rescue plan having lapsed or failed.
Being that the case, the allocated judge’s interest in the provisional liquidation application of THL therefore shifts to whether the company is solvent or insolvent.
The judge has to determine if there is enough liquidity to cover the company’s continued operations for at least six months, and enough liquidity to pay off the company’s debt to secured creditors, unless there is an arrangement between the company and the secured creditors.
If the judge is not satisfied with the above, the judge shall be left with no option but to approve the provisional liquidation.
Therefore, to save THL and livelihoods in the sugar sector ecosystem – sugarcane growers’/farmers’ investments, suppliers etc – the following should happen the next High court hearing of the BRP’s provisional liquidation application:
· The major secured creditors – the Industrial Development Corporation (IDC) and Vision Group – should enter into an agreement to convert the IDC’s Post-Commencement Finance (PCF) to a revolving working capital facility. Vision Group should then convert part of its claims to equity to improve the balance sheet on mutually satisfactory terms.
On the back of this agreement, THL should enter into a settlement arrangement with the South African Sugar Association.
· Vision must pay the R75 million promised to the unsecured creditors;
· The BRPs must immediately withdraw their provisional liquidation application before the next court date;
· Given the IDC/Vision agreement, referred to above, THL should then exit business rescue within a month. The Vision Group can then assume control and management of business operations;
· Vision Group should implement its promise to include, as shareholders, key stakeholders in the South African sugar business such as the IDC, sugarcane growers, employees and the Zulu Kingdom;
· The Department of Trade, Industry and Competition must speed up the implementation of the long-overdue sugar industry reforms that include new tariffs to protect the local industry and jobs from imports.
Trade, Industry and Competition minister, Parks Tau, the IDC, Vision Group and the BRPs should spend their time this week focussing on these matters.
Unless they do so, they should be aware that the ‘ambulance chasing’ witnessed during the virtual hearing of the Durban High Court last Friday, February 27, of more than 200 attorneys proves that if THL is not saved, the lawyers will be the only ones benefitting from this unfortunate saga.
Sizwe sama Yende is a veteran journalist and podcaster of The People’s Eye. He has extensively covered the Tongaat Hullet story.
Before the hearing of the provisional liquidation of Tongaat Hullet Limited starts in the Durban High Court, there are a few things that interested parties can still do to save the centennial company and 250 000 jobs
