High Court Confirms Status Of Payment Obligations Under The Sa Sugar Industry Legislation During Business Rescue

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high court confirms status of payment obligations under the sa sugar industry legislation during bus

By Lara Kahn and Sikelelwa Fumile

A landmark high court ruling found that business rescue practitioners cant have their cake and eat it too. The case involving sugar giant Tongaat Hulett balances the principles of corporate rescue with the broader societal imperatives of industry regulation.

The crux of the matter was whether business rescue practitioners BRPs could suspend certain statutory obligations during business rescue proceedings.

Tongaat has been in voluntary business rescue since October 2022. Its BRPs sought a declarator that they were entitled to suspend any obligation of Tongaat that arose under the Sugar Industry Agreement SI Agreement during business rescue, including any local market redistribution payments and related levies that became due during business rescue. They also suspended payment of the redistribution and levies for the first six months of the business rescue.

The Sugar Industry Agreement is crucial for the sugar industry as it ensures that the industry is protected through a revenue-sharing mechanism whereby overproducers pay levies, which are then redistributed by the sector's representative and regulator, the South African Sugar Association Sasa to smaller producers.