Business Rescue Does Not Protect Unlawful Possession: Capitec v Ubuntu [2026] ZASCA 123

When a company enters business rescue, a statutory moratorium stops most legal proceedings against it. For banks, asset financiers, and leasing companies, one question keeps coming up: does that moratorium stop a credit provider from recovering its asset after it has cancelled the finance agreement?

In Capitec Bank Limited v Ubuntu Family Health Centre Grayston (Pty) Ltd [2026] ZASCA 123, the Supreme Court of Appeal (SCA) gave a clear answer. Business rescue does not protect a company that is unlawfully in possession of another person’s property.

What Is the Business Rescue Moratorium?

Section 128(1)(b) of the Companies Act 71 of 2008 defines business rescue as proceedings to help rehabilitate a financially distressed company. One feature of these proceedings is a temporary moratorium on claims against the company.

Section 133(1) provides that during business rescue, no legal proceedings, including enforcement action, may be started or continued against the company, or in relation to property belonging to the company or lawfully in its possession, unless:

• the business rescue practitioner consents in writing; or
• the court grants leave.

Section 134(1)(c) adds that no person may exercise any right over property in the company’s lawful possession without the practitioner’s written consent.

In both sections, the key word is “lawful”.

The Facts

• Capitec financed a Porsche 911 under an instalment sale agreement. Capitec kept ownership until the price was paid in full.
• Ubuntu defaulted, and Capitec validly cancelled the agreement on 17 November 2023.
• On 29 November 2023, before the vehicle was recovered, Ubuntu’s board resolved to begin business rescue.
• The High Court held that the section 133 moratorium applied and dismissed Capitec’s application for return of the vehicle.
• The SCA overturned that decision and ordered the immediate return of the Porsche to Capitec.

What the SCA Decided

The SCA confirmed these principles:

• Section 133 protects proceedings relating to property the company owns or lawfully possesses.
• Business rescue was never meant to let a company keep assets that do not belong to it.
• Once a credit or lease agreement has been validly cancelled, the company’s continued possession may become unlawful.
• Where possession is unlawful, the owner may bring vindicatory proceedings despite business rescue.
• In those circumstances, the owner does not need the practitioner’s consent or the court’s leave.

Unlawful Possession Does Not Require a Crime

The SCA rejected the argument that possession is unlawful only where there is criminal conduct such as theft, fraud, or robbery. Continued possession after lawful cancellation of a contract is enough to make possession unlawful for purposes of sections 133 and 134 of the Companies Act.

Practical Implications

For credit providers and lessors

• A valid, well-documented cancellation is essential. In this case, the cancellation was common cause and happened before business rescue began.
• Keep records of breach notices, cancellation letters, and demands for return.
• Where cancellation happens after business rescue has started, different considerations may apply. Take legal advice before acting.

For business rescue practitioners

• Establish early which assets the company owns, which it holds under valid agreements, and which agreements have already been cancelled.
• A rescue plan that depends on assets the company has no right to keep is unlikely to succeed.

For directors

• Business rescue is not a way to hold on to assets after defaulting on, and losing, the right to use them.

Conclusion

The SCA’s judgment restores balance between protecting distressed companies and protecting owners’ rights. The moratorium in sections 133 and 134 of the Companies Act covers property a company owns or lawfully possesses. It does not cover property held after a finance or lease agreement has been validly cancelled. For credit providers, the message is clear: ownership rights survive business rescue.

Frequently Asked Questions

1. Can a bank repossess a vehicle from a company in business rescue?
   Yes, if the finance agreement was validly cancelled and the company no longer has a lawful right to possess the vehicle. The SCA confirmed this in Capitec v Ubuntu [2026] ZASCA 123.
2. What is the section 133 moratorium?
   It is a temporary suspension of legal proceedings and enforcement action against a company in business rescue, under section 133 of the Companies Act 71 of 2008. It applies to property the company owns or lawfully possesses.
3. Do I need the business rescue practitioner’s consent to recover my property?
   Not where the company’s possession is unlawful, for example after valid cancellation of the agreement. Where possession is still lawful, you need the practitioner’s written consent or the court’s leave.
4. What is a vindicatory action?
   It is a common-law claim (the rei vindicatio) by which an owner recovers its property from a person who holds it without a right to do so.
5. Does unlawful possession require theft or fraud?
   No. The SCA held that continued possession after lawful cancellation of a contract is enough to make possession unlawful.

Written by Mark Poole, Director & Head of Department, Strauss Daly Inc. | Senior Business Rescue Practitioner & Insolvency Specialist

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