01
What is Business Rescue?
Business rescue proceedings are proceedings aimed to facilitate
the rehabilitation of a company that is financially distressed by
providing for –
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the temporary supervision of the company, and the management of its affairs, business and property, by a business rescue practitioner;
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a temporary moratorium (stay) on the rights of claimants against the company or in respect of property in its possession;
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and the development and implementation, if approved, of a business rescue plan to rescue the company by restructuring its business, property, debt, affairs, other liabilities and equity (section 128(1)(b))
02
What is the test for Business Rescue?
The test for whether or not a company should be placed in
business rescue is whether or not the company is financially
distressed. The Act defines the words “financially distressed” to mean that; it appears to be 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.
It appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months. Together with the above there should also be a reasonable prospect to rescue the company
03
What is a Business Rescue Practitioner?
A Business Rescue Practitioner in South Africa, as defined by the Companies Act 71 of 2008, is a licensed professional appointed to navigate and oversee the restructuring and rehabilitation process of financially distressed companies, working to formulate and implement effective rescue plans in collaboration with stakeholders.
04
What is the Aim of Business Rescue?
The aim of business rescue is to restructure the affairs of a
company in such a way that either maximizes the likelihood of
the company continuing in existence on a solvent basis, or results
in a better return for the creditors of the company than would
ordinarily result from the liquidation of the company.
05
What is an Affected Person?
Affected persons are important role players in the business rescue process.
An affected person is a shareholder, creditor, employee (or
their representative) or a registered trade union representing employees of the company.
Affected persons have various rights throughout the business rescue process.