Business
rescue
Professional Legal Services In Cape Town & Gauteng
Business Rescue is a legal proceeding whereby a business rescue practitioner temporary supervises the company, including its management, business operations and property.
Contact Our Team
We’re Here to Help, Reach Out to Our Legal Professionals
Business rescue
Professional Legal Services In Cape Town & Gauteng
Business Rescue is a legal proceeding whereby a business rescue practitioner temporary supervises the company, including its management, business operations and property.
Contact Our Team
We’re Here to Help, Reach Out to Our Legal Professionals
Burnett Attorneys & Notaries is a boutique law firm
About Us business rescue
When a company is in financial distress, its directors and/or shareholders have a duty under the New Companies Act 71 of 2008 to act thereon. Action may include bringing an application for business rescue or going into liquidation. Burnett Attorneys can guide you through this process.
What is business rescue?
Business Rescue does exactly as the name suggests – it rescues the business from its financial distress and rehabilitates it. It is a legal proceeding whereby a business rescue practitioner temporary supervises the company, including its management, business operations and property with a view to helping it do better and overcome its financial crises. It is a way of restructuring the affairs of the company so that it can continue trading and rehabilitate itself.
the right time
When should a company apply for business rescue?
A company should go into business rescue when it is financially distressed. Financial distress is defined in section 128 (1) (f) in the Companies Act as: –
“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 (commercial insolvency); or it appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months (factual insolvency).”
A company should start the process at the first signs of financial distress. That is, either when it is reasonably unlikely that a company will be able to pay its debts when they fall due for payment, or when it is likely that the company will become insolvent in the immediate ensuing six months.
Frequently asked questions on business rescue
FAQ
How is a company placed in business rescue?
There are two ways in which a company can be placed in business rescue, namely, when the board of directors of a company resolves that the company voluntarily commence business rescue; and when an affected person makes a formal application to court for an order placing the company under business rescue.
How long do business rescue proceedings last?
Normally business rescue proceedings last for a period of three months, but it can be extended by order of court.
Who may apply for business rescue on behalf of a company?
An affected person may apply for business rescue on behalf of the company. An affected person is a director, shareholder, creditor, employee (or their representative) or a registered trade union representing employees of the company. Affected persons have several rights throughout the business rescue process (section 128(1)(a)).
What is a business rescue practitioner?
A business rescue practitioner is a person appointed by CIPC (Companies and Intellectual Properties Commission) to supervise the company during the business rescue process. Normally the business rescue practitioner will be a person who has experience in the business world, being an auditor, accountant, attorney, liquidation practitioner etc.
What is the effect on Legal Proceedings during the Business Rescue Process?
During the business rescue proceedings, there is as general moratorium on legal proceedings against the company. This means that third parties may not institute any legal proceedings against the company during the duration of the business rescue process, with some exceptions.
