Tongaat Hulett has avoided liquidation after the Durban High Court granted its Business Rescue Practitioners (BRPs) permission to withdraw the company’s provisional liquidation application, marking a major turning point in efforts to stabilise the embattled sugar producer.

The decision follows significant progress in securing both funding and a workable transaction to implement the company’s adopted Business Rescue Plan. The BRPs said on Wednesday that two requirements needed to be met to consider withdrawing the application.

The first was securing sufficient liquidity to support Tongaat’s ongoing operations; and the second was concluding a transaction to achieve the adopted Vision Business Rescue Plan.

“Significant progress has now been made in advancing both requirements,” said the BRPs.

The Industrial Development Corporation (IDC) has agreed to extend Tongaat Hulett’s post-commencement funding facility until September 2026, providing critical financial support to keep the company operational while the rescue process unfolds.

At the same time, a binding Heads of Agreement has been concluded between the IDC, strategic partner Vision, and Tongaat Hulett. The agreement outlines how the rescue plan will be implemented, including the refinancing of existing debt, payment arrangements for creditors, and the restructuring of key industry obligations.

The BRPs said the developments provided sufficient certainty to proceed with the rescue plan and remove the immediate threat of liquidation, which had been pursued only as a last resort in line with their legal obligations.

“The BRPs are accordingly satisfied that sufficient progress has been made to justify the withdrawal of the liquidation application, and for the implementation of the adopted Business Rescue Plan to proceed,” added the statement.

“The BRPs are relieved and deeply grateful that they are no longer required to pursue the liquidation application, an outcome they, and all stakeholders, have worked to avoid. The liquidation application was launched as a last resort by the BRPs in compliance with their statutory obligations and the withdrawal thereof is a significant milestone for everyone who depends on Tongaat Hulett and the sugar value chain.”

The withdrawal comes as a major relief for employees, sugarcane growers, suppliers and creditors, as well as communities dependent on the sugar sector, particularly in KwaZulu-Natal. Liquidation would likely have resulted in widespread job losses and severe economic disruption across the value chain.

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Despite the breakthrough, the company warned that serious challenges remain, particularly the growing influx of cheap imported sugar into the South African market. Imports have surged sharply, with more than 111 000 tonnes recorded or expected within the first three months of the current season alone.

If this trend continues, imports could reach about 450 000 tonnes this season – levels previously linked to mill closures and job losses.

Tongaat Hulett has called for urgent government intervention to curb imports and protect the local industry, warning that without such action, the gains made through the rescue process could be undermined.