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A high court judgment has drawn a sharper line around the use of liquidation in South Africa’s property sector by ruling that institutional creditors cannot use winding-up proceedings as a tactical debt collection tool.
The court found that such proceedings should not be used to force the sale of valuable property assets if a developer is fundamentally solvent but experiencing temporary liquidity constraints.
Nearly four weeks ago, the high court in KwaZulu-Natal dismissed an application to liquidate Schoonspruit Development over a disputed R15.5m debt, finding that the property developer remained commercially solvent despite short-term liquidity pressures.
The precedent emerged from a…