Lease agreements and the limitations of the moratorium on obligations in business rescue proceedings

The Companies Act 71 of 2008 (“the Act”), as amended, introduced a new process in the stead of its predecessor, known as judicial management. It is a fairly new addition to our law and therefore still largely misunderstood, as a result, the courts play an important role in clarifying what remains unclear in business rescue proceedings.

The latest clarification involves the moratorium in terms of Section 133 of the Act . A moratorium is “a temporary prohibition of an activity.”

Section 133 of the Act makes provision for a moratorium on legal proceedings or enforcement action against a company during ongoing business rescue proceedings. This, therefore extends to any property belonging to a company or that is lawfully in its possession. Therefore, no action may be commenced or proceeded within any forum. There are however, certain exceptions hereto.

So, what constitutes a ‘legal proceeding’ or ‘enforcement action’ in the context of property?

 

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