Business Rescue

What You Need to Know About Business Rescue

Business rescue is a formal process regulated by the Companies Act (No. 71 of 2008) that provides a company experiencing financial difficulties with an opportunity to restructure its operational model with a view to improving its cashflow. The law that creates and governs the process in South Africa falls under Chapter 6 of the Companies Act. The process offers a moratorium on legal actions or liquidation measures against companies experiencing financial distress, affording them “breathing space” to reduce their debt burden and produce the best possible outcomes for the company owners, employees, creditors, and shareholders involved.

Proceedings are aimed at facilitating the rehabilitation of a company by providing for temporary supervision, and management of its affairs, operations and property by an approved practitioner; a temporary moratorium (stay) on the rights of claimants against the company or in respect of property in its possession; and the development and implementation, if approved, of a business rescue plan to assist the company by restructuring its operations, property, debt, affairs, other liabilities and equity. In South Africa, this process must be conducted in partnership with an approved practitioner. They will assist the relevant company to choose optimal rehabilitation strategies.

The Purpose of the Process

The aim of business rescue is to restructure the activities of a company to either maximise the likelihood of it regaining solvency and continuing its existence or to ensure that a better return for the company’s creditors is achieved than would ordinarily result from liquidation.

Which Entities Qualify?

A company should be placed in business rescue if it is in financial distress. The Act defines “financially distressed” to mean that it is 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 is likely that the company will become insolvent within the immediately ensuing six months.

What is an Approved Practitioner?

A business rescue practitioner is a person appointed, or two or more persons jointly appointed, to oversee a company during the business rescue process.

Who or What is an Affected Person?

Affected persons are important role players in the process. An affected person is a creditor, employee (or their representative), shareholder, owner, or a registered trade union representing the company’s employees. In terms of the Companies Act, affected persons have various rights during the process.

Turn to Qualified Business Rescue Practitioners in Gauteng

Is your company fundamentally viable but struggling to meet its financial obligations in the short term? Will the entity, if given some short-term respite, be able to trade its way out of its current financial distress? Business rescue can provide the relief needed to allow your company to survive and recover.

Francois Uys Incorporated Attorneys has a proven track record of success with over 8000 completed cases. We offer expert facilitation, implementation, and ongoing guidance to deliver optimal solutions for financially distressed companies. We pride ourselves on doing our utmost to save your company with our team of experienced, highly competent insolvency, business rescue and company restructuring lawyers. 33 years of dedication to companies in financial distress qualifies us to provide expertise and assistance on any aspect of business rescue. Let our team advise you on the implementation of these proceedings.

In addition, we offer advice on the appointment of competent and effective practitioners as well as the duties, responsibilities and liabilities of all parties involved in the process.

It is of the utmost importance to act quickly if your company is experiencing financial distress as very short periods in which to act are set out in the new Companies Act.  Don’t hesitate to call us today.


Disclaimer: This article is for informational purposes only and does not constitute legal advice. Do not rely on the information contained in this article to make any decisions. For any advice on the topic of business rescue, contact Francois Uys Inc. The information is relevant as of the date of publishing.