Insight
September 7, 2026
On 07 October 2026 the Constitutional Court handed down a unanimous judgment in Salungano Group Ltd v Mashwayi Projects (Pty) Ltd and Others; Ndalamo Coal (Pty) Ltd v Mashwayi Projects (Pty) Ltd and Others [2026] ZACC 38. Mathopo J wrote for a full Bench comprising Mhlantla ADCJ, Dambuza J, Kollapen J, Majiedt J, Nuku AJ, Opperman AJ, Rogers J and Savage J.
Leave to appeal was granted. The appeals were upheld. The order of the Supreme Court of Appeal was set aside and replaced with the following declarations:
(a) Chapter 6 of the Companies Act 71 of 2008 does not permit post-commencement creditors to vote on the adoption of a business rescue plan.
(b) The amended business rescue plan presented on 28 July 2023 was not supported by holders of more than 75% of creditors’ voting interests as required by section 152(2) of the Companies Act 71 of 2008. As a result, the matter is remitted to the business rescue practitioner for a fresh vote.
The respondents were ordered to pay the applicants’ costs, including the costs of two counsel, in the High Court, the Supreme Court of Appeal and this Court.
The Factual and Legal Path to Remittal
The dispute centred on the business rescue of Arnot Opco (Pty) Ltd. At the section 151 meeting held on 28 July 2023 the practitioner included the voting interests of post-commencement creditors, most notably Mashwayi Projects. With those votes counted, Option B (sale of the business as a going concern) was initially reported to have secured 75.4% support. Ndalamo Coal’s acquisition proposal was then accepted.
Within days the practitioner identified material irregularities: retracted votes, double-counting, late proxies and group-versus-individual voting discrepancies. A forensic recount by Mr Makhuvele placed support at 72.2%, later revised to 70.5%. Once the impermissible post-commencement votes were stripped out and the irregularities corrected, the plan fell short of the statutory 75% threshold.
The High Court had held that only pre-commencement creditors may vote and, on that basis, declared the plan adopted. The SCA reversed on the legal question and, because of the voting irregularities, directed a fresh vote. The Constitutional Court has now confirmed both the legal exclusion of post-commencement creditors and the factual failure of the July 2023 plan to meet the threshold. Consequently the matter must return to the business rescue practitioner for a properly constituted fresh vote limited to eligible pre-commencement creditors.
The Court’s Decisive Holding on Voting Rights
A proper interpretation of Chapter 6 — text, context and purpose — excludes post-commencement finance (PCF) creditors from the voting constituency under section 152.
The principal textual anchors are:
- Section 150(2)(a)(ii) requires the plan to contain “a complete list of the creditors of the company when the business rescue proceedings began”. The temporal qualification is deliberate. Post-commencement creditors fall outside that defined pool.
- Section 145 determines voting interests by reference to amounts “owed to that creditor by the company” in terms that align with pre-commencement claims.
- Section 135 deliberately styles post-commencement finance providers as “lenders” rather than “creditors” and rewards them with a statutory super-preference and the right to take security. Preference is the legislative trade-off; governance power is not.
- Section 144 supplies a telling parallel: employees may vote only in respect of pre-commencement claims. Their post-commencement remuneration is protected by preference under section 135, not by a vote. The same architecture applies to PCF lenders.
Allowing post-commencement creditors to vote would create a constantly fluctuating body of voting interests, invite speculative acquisition of claims immediately before a section 152 meeting, and enable new money to outvote and potentially compromise the claims of the original creditor body. Comparative authority from the United States, the United Kingdom, India, Japan and Singapore consistently withholds voting rights from post-commencement financiers while protecting them through priority. South Africa’s regime follows the same logic.
Practical Consequences
Without the post-commencement votes the July 2023 plan failed the 75% threshold. The Constitutional Court has therefore ordered a fresh vote. That vote must be conducted by the business rescue practitioner on the basis of voting interests limited to pre-commencement creditors. Any plan now adopted will bind the company and all creditors in accordance with section 152(4), but the democratic mechanism that produces the plan is reserved exclusively for the creditor body that existed at commencement.
Business rescue practitioners must immediately recalibrate voting-interest schedules. Plans adopted between the SCA judgment of 29 January 2025 and today’s decision on the strength of PCF votes stand on uncertain ground and will require careful review. PCF providers retain the powerful statutory preference and security rights under section 135; those protections remain commercially significant. What they no longer possess is a statutory seat at the voting table. Future PCF negotiations will therefore place heavier emphasis on contractual covenants, conditions precedent tied to plan approval, and the credible threat of withholding further funding.
Looking Ahead
The Constitutional Court has closed a chapter of interpretive uncertainty. Business rescue remains a powerful tool for the rehabilitation of financially distressed companies. The preferential ranking of post-commencement finance continues to incentivise the injection of new capital. What has changed is the democratic mechanism through which the plan itself is approved.
Pre-commencement creditors are once again the decisive constituency. The July 2023 plan did not succeed once PCF votes were excluded and irregularities corrected. The matter now returns to the business rescue practitioner for a fresh, properly constituted vote. The law is settled. The market must adapt accordingly.
