Business Rescue
Based on the answers you have given, it seems your business may be in distress and needs to take advantage of the business rescue proceedings as defined in the Companies Act.
The purpose of business rescue is the effective rescue and recovery of financially distressed companies.
How to decide if you need to need to go into business rescue
- It appears reasonably unlikely that the company will be able to pay all of its debts as they become due and payable within the immediately ensuing six months OR
- It appears reasonably likely that the company will become insolvent within the immediately ensuing six months
- The board must have reasonable grounds to believe that there is a reasonable possibility of saving the company
- It appears reasonably unlikely that the company will be able to pay all of its debts as they become due and payable within the immediately ensuing six months OR
How the process works
- Can be launched voluntarily or by way of an application to court by creditors or affected parties
- Voluntary business rescue proceedings initiation requires that a company's shareholders must adopt a resolution (i.e. supported by 50% of voting rights exercised in the resolution).
- Involuntary business rescue proceedings initiation: may be initiated by creditors or affected parties.
- Prepare a plan that will allow the company to trade out of its financial predicament on a solvent basis in the future
- Plan must be voted on and approved by creditors
- If adopted, binds the company, its creditors and holder of securities
- Further details on the process to follow are laid out in Chapter 6 of the Companies Act
What this means for your business
- Process is managed by the business rescue practitioner, who has the power to suspend almost any contract entered into by the company for the duration of the business rescue proceedings
- Allows directors to continue exercising their duties, subject to the authority of the business rescue practitioner
- Protects the company's assets against creditors by the imposition of a moratorium (stay of all claims)
- Allows employees to continue to be employed in terms of their employment contracts - any remuneration not paid places the employees in the position of a preferential creditor
- Renders any guarantee or surety given by the company unenforceable
- Allows disposal of property in the ordinary course of business, where sale has been approved in advance or as part of the implementation of the business rescue plan
Helpful contacts
- Please contact your Relationship Manager at your bank
