Court orders MBD to comply with ruling in R462m debt-review dispute

The Western Cape High Court has ordered debt collector MBD Legal Collections to comply immediately with a March ruling that protects paying arrangements for more than 44,000 debt-review accounts worth about R461.7 million. The court said keeping the earlier order suspended while MBD pursued an appeal would cause irreparable harm to the administrator, Consumer Friend, and to affected consumers.

Background to the dispute

The dispute arises from MBD’s acquisition in September 2025 of a portfolio of debt-review accounts from RCS Cards. The procurement documents for the sale stated the portfolio would be acquired with Consumer Friend as managing agent, and Consumer Friend retained the right to collect on those accounts.

MBD continued using Consumer Friend and paid commission for several months after the acquisition. In January MBD said it did not accept it was bound by the Consumer Friend agreement, characterised the relationship as month-to-month and sought to terminate it from the end of February. MBD also sought to redirect payments to itself.

Court orders and the appeal

In March, Consumer Friend obtained a court order declaring MBD bound by the agreement with RCS as a permitted assign or legal successor. That order required MBD to recognise Consumer Friend’s right to continue administering the affected accounts, restore existing payment arrangements and prohibited MBD from rerouting payments or interfering with Consumer Friend’s administration.

MBD was granted leave to appeal, which normally suspended the March order. Consumer Friend then returned to court seeking permission to enforce the ruling while the appeal proceeds.

Attempts to reroute payments

The court heard that MBD continued efforts to reroute payments while the earlier order was suspended. In April, MBD’s attorneys demanded Debt Busters redirect payments to MBD and threatened urgent proceedings, punitive costs, damages and a complaint to the National Credit Regulator if it failed to comply. MBD also contacted Zero Debt, Pioneer Debt Solutions and PayPlan as part of its efforts to reroute payments.

Scale of the portfolio and operational impact

Consumer Friend’s DReX platform serves more than 2,000 registered debt counsellors and about 70,000 registered consumers. The portfolio bought by MBD comprises about 44,216 accounts with a reported book value of about R461.7 million at acquisition.

Consumer Friend told the court that rerouting payments meant it no longer received transaction information directly and instead depended on information supplied by MBD or related company Capital Data. It said delays or problems with that information could lead to incorrect account balances and statements, incorrect terminations, delayed paid-up letters, incorrect settlement figures or an inability to respond accurately to consumers or debt counsellors.

Court findings

Judge Ndita found there had been delays in transactional information flowing from MBD and Capital Data to Consumer Friend, hampering Consumer Friend’s operations. Given the portfolio’s size, the judge said the impact of those failures was magnified and that Consumer Friend would suffer irreparable harm if the March order remained suspended while MBD appealed.

The court said MBD had not identified operational, reputational or other consequences it would suffer if the order took effect, and that any financial prejudice to MBD could be calculated if it ultimately succeeded on appeal. The judge consequently ordered that the March ruling take effect while the appeal is determined.

Costs and consumer complaints

The court ordered MBD to pay the legal costs of the application, including the costs of two counsel at the higher Scale C rate.

MBD has also received thousands of reviews on the consumer platform HelloPeter: a rating of 1.1 out of five based on 438 reviews over the past 12 months, and more than 7,000 reviews overall. Recent complaints on the platform include allegations of payments not being correctly allocated, consumers receiving demands after making payments, difficulty obtaining paid-up letters and unresolved account queries. The complaints are consumer allegations and have not necessarily been independently verified.