A recent judgment handed down by the Supreme Court of Appeal (SCA) on 31 March 2025 brings much-needed clarity to an issue that has sometimes left practitioners in a quandary: whether an appellate court can grant a final winding-up order where a provisional order has already been granted in respect of the same company but in another court. The judgment – Resilient Rock (Pty) Ltd v Voltex (Pty) Ltd t/a Atlas Group (1132/2023) [2025] ZASCA 33 – tackles this head-on and offers valuable insights for anyone involved in liquidation proceedings.
At the heart of the appeal were two parallel winding-up applications launched in different divisions of the High Court against the same company, Resilient Rock (Pty) Ltd. One court (in the Trencon application) granted a provisional winding-up order, and, in a separate matter, the High Court (sitting as a Full Court on appeal in the Voltex application) granted a final winding-up order. Resilient challenged the Full Court's decision on the ground that section 347(5) of the Companies Act 61 of 1973 strictly prohibits a court from granting a final winding-up order against a company "which is already being wound up by order of a Court within the Republic."
This prohibition gave rise to several questions:
- Does an appellate court have jurisdiction to grant a final winding-up order where a provisional order had already been granted in a different forum?
- How does section 347(5) operate in circumstances involving two separate but overlapping winding-up proceedings?
- What happens when conflicting court orders exist (one provisional, one final) against the same company?
- How does the principle of concursus creditorum (factor into these seemingly competing processes?
The Full Court had initially reasoned that it could grant the final winding-up order retrospectively, as an appellate court's order typically replaces (or "substitutes") the order of the lower court. In other words, it argued that by treating the situation as though the provisional order (granted in the Trencon application) did not exist at the time the High Court first heard the matter, the appeal court could simply ignore the prohibition in section 347(5).
However, the SCA found this interpretation untenable. Section 347(5) does not merely apply to the court of first instance; its wording unequivocally includes any court dealing with the winding-up. Once a provisional order exists, the courts are barred from granting another winding-up order in respect of the same company.
The SCA's reasoning
1. Plain and Peremptory Language
The SCA emphasised that section 347(5) uses mandatory language:
"The Court shall not grant a final winding-up order in the case of a company ... which is already being wound up by order of a Court within the Republic."
The words "shall not" are peremptory, leaving no scope for courts to circumvent the prohibition simply because one is sitting in an appellate capacity.
2. Effect of a Provisional Winding-Up Order
A provisional winding-up order places the company into a state of winding-up, triggering the concursus creditorum: the moment when creditors' rights against the company become fixed. Once that process is underway, issuing another winding-up order creates legal uncertainty, potentially compromises the assets in the estate, and disrupts the orderly realisation of claims.
3. Mootness and Practical Implications
The SCA also noted that once a valid provisional order was in place, an appeal on the same subject matter risked becoming moot. The Full Court should have stayed the appeal or otherwise disposed of it in a manner that did not grant a competing order.
Concursus Creditorum
For practitioners in insolvency and business rescue, this decision underscores the importance of maintaining a single, coherent winding-up process. Once one court steps in with a provisional liquidation order, all creditors must protect their interests within that single legal framework. Attempting to proceed with a parallel final order elsewhere risks the court's refusal (or later reversal) of that order.
Only one winding-up process can and should proceed at any given time.
Key takeaways for practitioners
- Check for an existing order – Before launching or appealing a winding-up application, ensure there is no provisional already granted – even in another court.
- Single process takes priority – Courts and creditors have strong incentives to avoid "competing liquidations." If a company is already in provisional liquidation, all interested parties should work within that framework.
- Retrospective substitution is limited – An appellate court's power to substitute its order for that of a lower court does not override statutory prohibitions like section 347(5).
- Concursus Creditorum – A fundamental principle in insolvency law, concursus creditorum, ensures orderly realisation of claims. Parallel or conflicting orders undermine certainty and may lead to chaotic asset distributions.
The SCA's judgment in Resilient Rock has put to rest any confusion over whether an appeal court may grant a final winding-up order when another court has already placed the company under provisional liquidation. The answer is resoundingly no. Section 347(5) acts as an absolute statutory bar, ensuring that a winding-up process, once started, has continuity and certainty – values essential to the fair and efficient management of insolvent estates.
For businesses, creditors, and practitioners in the realm of, liquidation, this is a welcome development. It provides clarity, reduces the risk of conflicting rulings, and upholds the orderly nature of the concursus creditorum. Above all, it underscores the importance of a single, unified approach to winding-up a distressed company – a crucial aspect of an already complex area of commercial law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
