Are your suretyships safe during business rescue proceedings?

stbb suretyship


Suretyships by their very nature are accessory to the principle debt and provide the creditor with additional security. In the instance where the principle debt is discharged, compromised, or otherwise invalid, the suretyship accessory to that debt follows the same fate.


Depending on the wording of an approved business rescue plan, such plan may compromise or extinguish the principle debt or a part thereof. In the case of Investec Bank v A Bruyns 2012 (5) SA 430 (WCC) Rogers AJ (as he was then) stated that “ … a surety for the company would not be liable to the creditor for more than so much of the claim as survives the implementation of the business rescue plan”.


What is of significant importance is the specific wording of the suretyship agreement and whether it can survive a compromise or extinction of the principle debt.


Will your suretyship stand up to the test? To be sure, contact REFQAH FATAAR HO-YEE at or tel 0216734700 / 0827827771

Posted in Research.