Tongaat Hulett's provisional liquidation hearing takes place.
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The outcome for creditors owed money by Tongaat Hulett hung in the balance as its provisional liquidation application was heard in the Durban High Court today.
This follows the collapse of its business rescue plan earlier this year.
The hearing marks a decisive moment for the embattled sugar producer, which has been under business rescue since October 2022. The business rescue plan was agreed to by stakeholders at the end of May 2023.
Tongaat Hulett advised shareholders on 12 February 2026 that the sale agreements underpinning its rescue plan had lapsed after suitor Vision declined to grant an extension, leaving the plan no longer capable of implementation.
The business rescue practitioners said there was no longer a reasonable prospect of rescuing the company and filed for provisional liquidation. “As a result, the business rescue plan is no longer capable of implementation,” the company said at the time.
The rescue plan, approved by creditors in January 2024, had relied on Vision acquiring key assets and stabilising the business through a combination of restructuring and asset sales.
Its implementation was subject to several conditions, including the refinancing of a R2.3 billion facility from the Industrial Development Corporation, the funding of a R517 million escrow account linked to the South African Sugar Association, and R75 million for distribution to concurrent creditors.
With these conditions unmet, the agreements lapsed, effectively ending the rescue process.
The hearing is the latest development in a prolonged and increasingly uncertain rescue process, with the company having faced mounting financial pressure and limited options for recovery.
Tongaat Hulett went into business rescue after the board found the companies were in “financial distress” due to a working capital shortfall of about R1.5 billion.
The crisis followed years of high debt, alleged accounting irregularities, and poor management, worsened by the COVID-19 pandemic and the KwaZulu-Natal unrest in 2021. A group of banks had also refused to extend more credit.
The implementation of the business rescue plan has faced several challenges, including missed funding deadlines. The company used to operate four sugar mills in South Africa, on the KwaZulu-Natal north coast and in Zululand.
More recently, the Supreme Court of Appeal ruled that sugar levies payments are a legal requirement and the producer had to pay them.
As part of the business rescue process, the practitioners tried to pause payments under the Sugar Industry Agreement, which governs levies and revenue sharing across the sugar sector.
They argued that the Companies Act allows companies in business rescue to temporarily suspend obligations arising from existing agreements to give them breathing space.
The South African Sugar Association and other industry stakeholders opposed this, saying the payments are statutory obligations under the Sugar Act and the agreement itself, not ordinary contractual debts.
Tongaat Hulett shares remain suspended on the JSE, with shareholders advised to exercise caution.
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