Military company Paramount Industrial Holdings (PIH), a part of the Paramount group of companies, has filed for business rescue amid legal disputes within another division of the Paramount group. Despite this, other subsidiary companies in South Africa are expected to continue operating normally.
The PIH board made the decision to enter business rescue on 11 November. Documents submitted to the Companies and Intellectual Property Commission (CIPC) indicated that PIH’s South African operations were experiencing significant financial distress, posing a serious risk to their ongoing sustainability.
The financial difficulties stem from a dispute between the parent company in the United Arab Emirates, Paramount Group Limited ADGM (Abu Dhabi Global Market), and unmanned vehicle manufacturer Abu Dhabi Autonomous Systems Investments (ADASI). In August, Paramount ADGM filed for Chapter 11 bankruptcy protection in Delaware, United States, as a result of this dispute.
Paramount revealed that a limited number of its non-operating entities voluntarily filed for Chapter 11 protection in the United States following an arbitration award issued in August 2024, stemming from a dispute initiated by ADASI in 2022.
The Chapter 11 proceedings have resulted in a cutoff of funding to South African operations. Willem van Biljon, director of Paramount Industrial Holdings, stated in his CIPC filing that Paramount’s South African holding company and subsidiaries typically received funding via a loan facility from Paramount Group Limited in the UAE. However, the parent company could no longer lend money to the South African companies due to the inaccessibility of funds caused by the bankruptcy filing.
As a result, Paramount Industrial Holdings now has to rely solely on its own revenue to manage the liquidity of the company and its subsidiaries. Van Biljon noted that without immediate intervention, the company’s cash reserves would be insufficient to cover ongoing operational and administrative expenses, as well as payments due to existing creditors.
Paramount Industrial Holdings is seeking to reorganize and provide for operational expenses and working capital through the business rescue process. The company stated that undertaking business rescue is a responsible action to safeguard long-term stability. Importantly, the business rescue process is expected to unlock cash for the subsidiary companies through post-commencement funding, supporting ongoing operations and growth.
The business rescue process affects only the holding company and has no impact on the operational structure, roles, or day-to-day work within the subsidiary companies. The subsidiary companies remain strong and will continue to operate as usual.
The CIPC lists Paramount Industrial Holdings as being in Business Rescue, while other South African Paramount companies are listed as being In Business. These include Paramount Aeronautical Solutions, Paramount Aerospace Holdings, Paramount Aerospace Industries, Paramount Aerospace Innovations, Paramount Aerospace Systems, and Paramount International.