In instances like these this means that the Tenant, being a juristic entity at law and thus not a natural person, has voluntarily placed itself under Business Rescue in terms of Section 129 of the Companies Act, 2008.
Business Rescue proceedings aim to rehabilitate a financially distressed company by providing for temporary supervision of the company and management of its business and assets (this is taken as a measure short of liquidation). Thus a temporary moratorium (period of grace) is created regarding claims that any creditors have against the company.
So what does a Landlord do when a Tenant is in arrears with its rental obligations to a Landlord and the Tenant subsequently places itself under business rescue? The Landlord as a creditor cannot enforce the rental obligations of a Tenant in light of the period of grace afforded to the Tenant and since business rescue proceedings can lead to a lengthy process, a Landlord can be left in quite the predicament for the enforcement of the Tenant’s obligations in terms of the lease agreement.
For more information pertaining to the rights of parties in situations of this nature, how to practically deal with the business rescue process and the proving of claims, and most importantly how to ensure that your lease agreements are legally compliant and drafted in a manner so as to properly protect the rights of both Landlord and Tenant for all unexpected predicaments, please contact our commercial department at
Article by Melanie de Vries (Senior Associate)
