Is The BRP's Power To Suspend Contractual Obligations A Cause For Concern To Landlords?

• Published date: 29 June 2020
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Corporate and Company Law, Landlord & Tenant - Leases
• Law Firm: Clyde & Co
• Author: Lauren Fine

The national lockdown in South Africa has left many companies financially distressed and unable to meet their contractual obligations. Looming on the landlord's horizon may well be its approach to tenants who are placed under business rescue.

In an attempt to save the company from impending insolvency, section 136(2) of the Companies Act 71 of 2008 ("the Act") grants the business rescue practitioner ("the BRP") the power to entirely, partially or conditionally suspend the company's contractual obligations. As long as the company's obligations arise from contracts that were concluded prior to the commencement of business rescue and these obligations fall due within the business rescue period, the BRP may suspend the contractual obligations for the duration of the business rescue process.

Even more empowering to the BRP is section 136(2)(b) of the Act, which provides the BRP with the opportunity to apply to court...