Constitutional Court Rules Post-Commencement Creditors Cannot Vote on Business Rescue Plans

On 7 October 2026, the Constitutional Court delivered judgment in Salungano Group Ltd v Mashwayi Projects (Pty) Ltd and Others; Ndalamo Coal (Pty) Ltd v Mashwayi Projects (Pty) Ltd and Others [2026] ZACC 38. The unanimous judgment answers a question on which the lower courts had disagreed: may creditors whose claims arose after business rescue commenced vote on the business rescue plan?

The Court held that they may not. Chapter 6 of the Companies Act 71 of 2008 limits voting on a business rescue plan to the creditor body that existed when business rescue commenced.

What Is a Post-Commencement Creditor?

A post-commencement creditor is a person whose claim against a company arises after business rescue proceedings have commenced. This includes:

• Post-commencement financiers: lenders who advance funds to the company during business rescue
• Suppliers and service providers: parties who extend credit to the company during business rescue

A pre-commencement creditor is a person whose claim existed before business rescue began. These are the creditors whose claims a business rescue plan can compromise.

How the Case Reached the Constitutional Court

The dispute arose from the business rescue of Arnot Opco. At a creditors’ meeting in July 2023, Mashwayi Projects, a post-commencement creditor, voted against the plan. Without its vote, the plan would have met the required approval threshold.

• High Court: only pre-commencement creditors may vote, and the plan was validly adopted.
• Supreme Court of Appeal ([2025] ZASCA 5): post-commencement creditors are entitled to vote.
• Constitutional Court: upheld the appeals by Salungano and Ndalamo Coal and set aside the SCA’s decision.

Why the Court Excluded Post-Commencement Creditors

The Court’s reasoning rests on four points:

• Chapter 6 of the Companies Act does not define “creditor”, and the omission of post-commencement creditors from the voting provisions was a deliberate legislative choice.
• The reference to “each creditor” in section 145(2) of the Companies Act does not extend voting rights to post-commencement creditors.
• Pre-commencement creditors carry the risk of having their claims compromised by the plan, so they hold the vote.
• Allowing post-commencement creditors to vote would undermine certainty and could let speculative investors influence outcomes to the detriment of pre-commencement creditors.

How Post-Commencement Financiers Are Protected

Post-commencement financiers are protected through payment priority, not voting power. Section 135 of the Companies Act ranks post-commencement finance ahead of most unsecured pre-commencement claims. Under section 135(4) of the Companies Act, that preference remains in place if business rescue is followed by liquidation, subject to the costs of liquidation.

Practical Implications for Lenders and Creditors

For banks, finance houses, asset-based lenders, trade creditors and institutional investors:

• Pre-commencement exposure carries the vote. Creditors owed money before business rescue retain control over whether a plan is adopted.
• Post-commencement funding buys priority, not influence. Lenders should assess post-commencement finance on the strength of the section 135 of the Companies Act preference alone.
• Voting interests must be calculated correctly. Practitioners must classify creditors accurately. A plan adopted on the strength of post-commencement votes may be open to challenge.
• Approval thresholds apply to pre-commencement claims. Section 152(2) of the Companies Act requires support from more than 75% of the creditors’ voting interests that were voted, including at least 50% of the independent creditors’ voting interests that were voted.

Conclusion

The judgment settles a question that the High Court and Supreme Court of Appeal answered differently. Post-commencement finance remains a protected restructuring tool, but the power to approve or reject a business rescue plan rests with creditors recognised at the start of the process. Lenders should factor this into how they structure distressed lending and recovery strategies.

Frequently Asked Questions

1. Can post-commencement creditors vote on a business rescue plan in South Africa?
   No. The Constitutional Court held in Salungano Group v Mashwayi Projects [2026] ZACC 38 that Chapter 6 of the Companies Act does not give post-commencement creditors a vote.
2. Who can vote on a business rescue plan?
   Creditors whose claims existed when business rescue commenced. Their voting interests are calculated on the value of their claims.
3. What is post-commencement finance?
   Funding or credit provided to a company after business rescue proceedings have started. Section 135 of the Companies Act gives it preference in payment.
4. Does post-commencement finance keep its priority if the company is liquidated?
   Yes. Section 135(4) of the Companies Act preserves the preference if business rescue is followed by liquidation, subject to liquidation costs.
5. What percentage of votes is needed to approve a business rescue plan?
   Under section 152(2) of the Companies Act, more than 75% of creditors’ voting interests must support the plan, including at least 50% of independent creditors’ voting interests.

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

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