- A former executive says two company vehicles formed part of his retrenchment package
- Liquidators argue the transfers unlawfully stripped R751 500 from an insolvent company
- The Full Court in the High Court in Johannesburg will now decide whether the vehicle payout was lawful
A company on the verge of collapse gave a departing executive two vehicles in place of a cash payout. Years later, that decision has become the focus of one of the most significant liquidation disputes to reach the Full Court in the High Court in Johannesburg.
The battle pits the joint liquidators of Allied Mobile Communications against former executive Francois van Eyssen, who says a Ford Everest and Hyundai H1 were part of his negotiated retrenchment deal. The liquidators argue the transfers were invalid because they reduced the assets available to creditors as the company was winding up.
How two vehicles became a court battle
The earlier High Court judgment declared both vehicle transfers void under the Companies Act and ordered Van Eyssen to repay R751 500, plus interest from November 2019 and legal costs.
Van Eyssen has consistently argued that he received the vehicles as an employee, not as an ordinary creditor. He says the settlement was reached during a legitimate restructuring process, and that retrenchment benefits from a financially distressed company should be treated as ordinary business transactions.
The liquidators reject that, saying the telecommunications company had no legal basis to dispose of valuable assets in the lead-up to liquidation.
Judge Adams says the law needs clarity
The application for leave to appeal was first heard by Acting Judge C Bothma, who died before delivering judgment. Judge LR Adams then decided the matter.
Judge Adams found that the appeal raises an important legal question, as South African courts have reached different conclusions on whether retrenchment packages paid by distressed companies count as transactions in the ordinary course of business.
Granting leave to appeal, Judge Adams said, “The case has a reasonable prospect of success.” The judge said that the conflicting legal authorities give a strong reason for the Full Court to consider the dispute.
What happens next
The Full Court in the High Court in Johannesburg will decide whether the vehicle transfers were legally protected, even though the company was on the brink of liquidation. Judge Adams ordered that the costs of the leave to appeal application will be costs in the appeal.
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