A Business Rescue Practitioner May Save Your Company
Juristic persons (companies, close corporations, partnerships etc.) declare insolvency in terms of the Companies Act 61 of 1973. When a company in South Africa declares insolvency, it means that the company is unable to pay its debts as they become due. One option open to an insolvent company is to apply for liquidation (voluntary) or at the request of a creditor (involuntary). However, there are several other options open to a company that declares insolvency. One of these is to be placed in business rescue where a business rescue practitioner takes charge of the affairs of the company. Business rescue is a process designed to facilitate the rehabilitation of a company that is financially distressed by providing for the temporary supervision of the company and the management of its affairs and property by a business rescue practitioner.
A business rescue practitioner is a professional appointed to oversee and implement the business rescue process for the distressed company. Business rescue is part of a legal and regulatory framework designed to assist companies facing financial difficulties and the threat of insolvency. The role of a business rescue practitioner generally involves taking steps to rehabilitate and save the company rather than allowing the company to be liquidated.
Business Rescue Practitioner Versus Liquidator
A company may be liquidated without trying business rescue if the prospects of business rescue being successful are considered unlikely. When business rescue fails, the business rescue practitioner is typically replaced by a liquidator who is appointed to sell the company’s assets and distribute the proceeds to creditors according to the Companies Act’s prescribed order of preference. The company stops operating, is wound up and its assets are sold to pay off creditors. At the end of liquidation proceedings, the company ceases to exist. A business rescue practitioner’s role is to save the company so that it may trade back to profitability and pay off its creditors.
One would normally declare insolvency and liquidate as a last resort when a business has no realistic chance
of meeting its financial obligations. Commonly this is when your total debts far exceed your assets and income, and your creditors are already taking legal action against you to recover debts that you cannot pay. Whether to choose business rescue, liquidation or one of the other options open to companies can be a complex decision that varies depending on the specific situation the indebted company finds itself in. The consequences for all interested parties can be significant.
Consult with Insolvency Professionals
It’s crucial to seek professional advice from an experienced attorney who specialises in matters relating to debt and insolvency before making any decisions. They will provide insolvency and debt legal services, including business rescue practitioners, after assessing your company’s situation.
Declaring insolvency has serious implications and should not be taken lightly. With a long history of success, Francois Uys Incorporated Attorneys are committed to helping businesses navigate debt to achieve optimal outcomes. With over 8,000 completed cases, our expert team of insolvency, business rescue, and company restructuring lawyers offer professional ongoing guidance to clients. Our team of experienced practitioners will do their utmost to save your company from liquidation if possible. With 33 years of dedication to helping companies in financial distress, we are qualified to provide expertise and assistance on any aspect of company debt including the appointment of a business rescue practitioner where this is deemed the best strategy.
We will guide you through the formalities and represent you in all the critical consultations. Our three decades of experience allow us to assist financially distressed companies and have resulted in an extensive list of satisfied clients. Make an appointment with Francois Uys Inc Attorneys today and let us assist you.
Disclaimer: This article is for information purposes only. It does not constitute legal advice and cannot be used to make any decisions. For advice on the topic of insolvency and business rescue, contact Francois Uys Inc. The information is relevant as of the date of publishing.
