A landmark decision has been made by the Supreme Court of Appeal whereby the concept of a binding offer in the business rescue context has now been clarified.
Previously in circumstances where a business rescue plan cannot be adopted due to opposition, creditors in support of the plan would make binding offers to those creditors opposed to it. Offers are made to buy the opposing creditors’ claim, in order to obtain more voting rights in support of the plan. In other words, if Creditor 1 made a binding offer to Creditor 2, Creditor 2 would in essence lose their voting rights. Creditor 2 was not given the opportunity to either accept or decline the offer.
The SCA has now clarified the position in that the nature of a binding offer should be construed in a similar light to that of the common law position, whereby both offer and acceptance need to take place. “The settled meaning both in general use and in the more technical legal use of the word ‘offer’ is that it is only on the acceptance that an offer creates rights and obligations”.
Access the judgment here:- http://www.saflii.org/za/cases/ZASCA/2015/69.html