Tongaat Hulett business rescue practitioners announced last month that they had filed an application to the High Court seeking to discontinue business rescue proceedings and place the company's South African operations into provisional liquidation, following an extensive and exhaustive process to rescue it.
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The government has stepped up efforts to prevent the provisional liquidation of Tongaat Hulett Limited (THL), warning that the collapse of the sugar producer would have devastating consequences for thousands of jobs and rural livelihoods, particularly in KwaZulu-Natal.
Last month, Tongaat Hulett business rescue practitioners announced that they had filed an application to the High Court seeking to discontinue business rescue proceedings and place the company's South African operations into provisional liquidation, following an extensive and exhaustive process to rescue it.
The Department of Trade, Industry and Competition (the dtic) on Tuesday confirmed that it will oppose the liquidation proceedings currently before the courts and continue supporting lawful efforts to secure a viable and durable solution for the embattled company.
The dtic director-general Simphiwe Hamilton told Parliament that both the department and the minister are opposing the liquidation bid, alongside other stakeholders in the sugar value chain. The Industrial Development Corporation (IDC) is also opposing the application.
Hamilton said the majority of stakeholders do not believe liquidation is the appropriate path, arguing instead that either the originally approved business rescue plan should be implemented or a revised plan should be tabled and voted on by creditors.
“No one believes that Tongaat is right on liquidation and that the originally voted for business plan by the creditors should either be executed as voted for, or a new plan should be considered and voted for,” Hamilton said.
“And so, liquidation is not an option that is being entertained by the sector. Without compromising the affidavit that the Minister will be signing tomorrow, the plan is to prevent the failure of Tongaat through either the execution of the plan as it was approved or finding new strategic equity partners who will do the same.”
Opposition has grown against the liquidation of Tongaat Hulett as multiple parties prepare to file their arguments in the Durban High Court. A draft order has been prepared and given to Judge Sanele Hlatshwayo ahead of the virtual sitting on Friday as each of the parties needed time to file their opposing papers, answering affidavits, as well as heads of arguments before the hearing.
Last week, the dtic described Tongaat Hulett as a systemically important player in South Africa’s sugar value chain.
The department warned that liquidation would have far-reaching effects across KwaZulu-Natal, where the sugar industry underpins thousands of direct and indirect jobs, small-scale growers, rural economies and downstream industries.
It said the collapse of this ecosystem would deepen economic distress in already vulnerable communities and undermine years of investment in transformation, industrial capacity and agricultural development.
The dtic indicated it will intensify engagements with stakeholders, including the IDC, labour unions, growers, financiers, investors and affected communities, to explore sustainable solutions.
These efforts are aligned with broader policy objectives such as protecting jobs and livelihoods, safeguarding small-scale and emerging farmers, preserving industrial and agricultural capacity critical to food security, and ensuring accountability and transparency.
While opposing liquidation, the department stressed that it will respect the independence of the courts and ongoing legal processes.
Beyond the broader industry implications, concerns have also emerged about the potential impact of Tongaat Hulett’s financial distress on essential infrastructure, particularly the Tongaat Water Treatment Works.
eThekwini Municipality confirmed that a Memorandum of Agreement has been in place between the municipality and Tongaat Hulett Sugar since 2003, with amendments over the years. A 2013 variation provided for the transfer of staff to the municipality, and a further agreement from 2023 to 2025 allowed for the leasing of land to construct a new Machine Control Centre following the 2022 floods.
According to municipality, all assets at the Tongaat Water Treatment Works are owned by eThekwini Water Services, and operational staff are municipal employees. However, the land on which the facility is built remains owned by Tongaat Hulett. Efforts by the municipality to purchase the land have been delayed due to the company’s business rescue status.
BUSINESS REPORT