This question has been answered in an interesting judgment by a competent commercial judge handed down on 14 April 2025.

It is well known that to the extent that a “Creditor” of a liquidated company requires access to the books and records of that company, such Creditor is to launch an ex parte application to the High Court for such consent. Such consent cannot be provided by the provisional liquidator(s) of the company.

This judgment comprehensively dealt with whether the word “Creditor” as utilised in the relevant section in the repealed Companies Act 71 of 2008 (“the old Companies Act”) (which applies to commercially insolvent companies) refers to proven Creditors only or includes all Creditors, i.e those who are not yet proven but are genuine Creditors of the liquidated company.

This judgment also dealt with an insolvent company’s right to privacy in the context of a Creditor having access to its financial books and records.

The judge in question, the Honourable Manoim J., stated as follows:

 “this case then turns on whether the process of proving a creditor’s claim, should serve as either the only method of establishing the general nature of the creditor’s claim or as a prior jurisdictional fact before the creditor has locus standi to bring a Section 360(1) application” and concludes that “I find no basis for such contention. The requirement for an application to court in terms of Section 360(1) acts as a sufficient safeguard. This is because if the claim is not genuine – which is a question of fact – the liquidator has an opportunity to dispute it. Thus the right to privacy is adequately protected.”

Resultantly Manoim J. after considering English law, Australian law and the learned author on company law, Hennochsberg, concluded that the word “Creditor” as utilised in Section 360(1) is not limited to proven Creditors only. With regard to privacy however, he imposed a restriction on those inspecting the company’s books and records which restriction reads as follows:

“Any person inspecting the documents on behalf of the applicants will be required to give a confidentiality undertaking to the respondents (the liquidators) that the documents will not be divulged to any third party except for:

a)       the purpose of further court proceedings;

b)       any application to the Master in terms of the Companies Act; or [obviously either to extend powers or to convene a Section 417/418 Enquiry]

c)       any other proceedings in furtherance of the administration of the Companies Act or the administration of justice.”

In summary then:

Any Creditor who is owed money by a company that is commercially insolvent (and is in provisional or final liquidation) is entitled to inspect the books and records of that company.

Such inspection can only be authorised by the courts on application to it. It cannot be authorised by the liquidators.

The term “Creditor” as referenced in many sections in Chapter 14 of the old Companies Act, unless the Companies Act specifies a restriction to the contrary, should be interpreted given its ordinary grammatical meaning, i.e a person who has a claim against a company which is unpaid.

Written by Colin Strime, Fluxmans Attorneys