RGS bid to reopen Tongaat rescue plan blocked

A Durban High Court judge has dismissed an attempt by Tongaat Hulett creditor RGS Group Holdings to revive a legal challenge that sought to dismantle the sugar giant’s business rescue plan, ruling that the application duplicated an earlier court battle that was pending.

The ruling on Friday leaves the Vision Group rescue plan intact for now and keeps alive a separate 2024 application in which RGS is challenging the legality of the plan.

Judge Singh found that allowing both matters to proceed would create parallel litigation, unnecessary costs and the risk of conflicting judgments.

“The court cannot sanction RGS running parallel litigation,” Singh ruled, finding that RGS should have pursued its earlier application to finality before launching fresh proceedings.

The dispute is the latest battle over the future of Tongaat Hulett, a company placed under business rescue in October 2022 after decades as one of KwaZulu-Natal’s most prominent industrial names. Business rescue practitioners later launched liquidation proceedings, but the proceedings were withdrawn after negotiations with stakeholders and continued funding support from the Industrial Development Corporation.

RGS then pursued a counter-application aimed at setting aside the Vision Group’s rescue plan, forcing disclosure of agreements linked to the restructuring,and obtaining permission to execute an earlier court order while an appeal process was pending. The court dismissed the efforts.

Businessman Robert Gumede, the founder of Guma Group and former Gijima Technologies executive chairperson, is part of the Vision Group consortium seeking to rescue Tongaat Hulett.

The fight centres on the Vision Group’s plan, which creditors adopted in January 2024. Under the plan, the Vision Group acquired lender claims and security interests connected to Tongaat Hulett’s debt, becoming the largest secured creditor. The face value of the claims acquired was about R11.73-billion, purchased for about R3.24-billion, according to the judgment.

RGS argued the plan was illegal. It alleged creditors were induced to approve it through misrepresentations, that business rescue practitioners illegally altered the plan and that the implementation process breached the Companies Act.

The Vision Group and the business rescue practitioners opposed the challenge, arguing that RGS was trying to relitigate issues raised in earlier proceedings. They relied on the principle of lis alibi pendens, which prevents courts from hearing substantially the same dispute twice while another matter remains unresolved.

Singh agreed. He found that the earlier November 2024 application remained pending because it had not been withdrawn, settled or decided. The fact that RGS had delayed progressing the matter did not end the litigation.

The judge also found that the two applications dealt with the same core dispute: whether the Vision plan was unlawful and should be set aside. He said RGS had not identified new events creating a fresh cause of action.

RGS also sought access to agency agreements and other documents linked to the Vision Group’s claims over Tongaat’s assets. The court rejected the request, finding RGS had failed to establish a legal entitlement to the documents. Singh said the facility agent’s confirmation that the Vision Group had met its payment obligations weakened RGS’s basis for demanding the agreements.

The court further rejected RGS’s attempt to force execution of an earlier order while an appeal application was pending. Singh found RGS had waited too long to seek execution relief and had failed to demonstrate exceptional circumstances or irreparable harm.

Sunday World