Appointment policy will deny workers' voice in choice of provisional liquidators - Solidarity

Solidarity today has expressed its satisfaction following an interdict granted by the Western Cape High Court last Friday, staying the implementation of the new appointment policy of provisional liquidators. The SA Restructuring and Insolvency Practitioners Association (Saripa) was successful in its urgent application to the Western Cape High Court, requesting that the implementation of the policy be stayed pending the outcome of the review applications brought by the Concerned Insolvency Practitioners Association (Cipa) and the South African Restructuring and Insolvency Practitioners Association (Saripa).

Trade union Solidarity successfully applied to be joined as an applicant in Cipa's court challenge against the Minister of Justice and Constitutional Development and the Chief Master of the High Court of South Africa.

The policy was published on 7 February 2014 and would have become effective as from the end of March this year, had the urgent interdict not been granted. It is ostensibly aimed at promoting race and gender representivity in the profession. According to the new policy, 40% of appointments would have been allocated to African, Coloured, Indian and Chinese females; 30% to African, Coloured, Indian and Chinese males; 20% to white females; and 10% to white males.

Adv. Dirk Groenewald, head of Solidarity's Centre for Fair Labour Practices, has voiced Solidarity's concerns about the impact of the policy, if implemented. According to Groenewald, the effect of the new policy will be to the detriment of workers, including previously disadvantaged workers. Says Groenewald: ‘The appointment of provisional liquidators according to a strict race and gender formula, regardless of a proven track record and without the support of workers, will undoubtedly lead to the appointment of persons who do not have the skills and experience to save a business from final liquidation. Workers need skilled provisional liquidators who have proven themselves capable and willing to save a business from final liquidation through competent management of the estate.'

According to Groenewald, it is not always in the best interest of workers and creditors that a final liquidation order be granted. In the mining industry, specifically, a final liquidation order means that the company would lose its mining license, which in turn means that employees would lose their jobs, which is clearly not in their best interest. For these reasons it is not unusual for mining companies to remain in a process of provisional liquidation for up to four years, which makes it all the more important that workers and creditors should have a say on who is appointed as provisional liquidator.

Statement issued by Dirk Groenewald, Head: Centre for Fair Labour Practices, Solidarity, April 2 2014

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