Business Rescue Practitioner in Johannesburg

When your business is struggling to stay afloat, your options are to either keep on trying to work through it, or to get professional help through using a business rescue practitioner. Business rescue is a fairly new process in the South African business landscape, and as such, there is a lack of understanding regarding how it works, as well as the potential benefits.

What is Business Rescue?

The Companies Act 2008 defines business rescue as facilitating the rehabilitation of a "financially distressed" company. This process of business rescue is done by a business rescue practitioner. During business rescue the company is placed under temporary supervision and there is a temporary moratorium in the rights of any claimants (e.g. creditors). The company undergoes reorganisation and restructuring in order to bring back to being more stable and profitable.

What is a Business Rescue Practitioner?

A business rescue practitioner acts as a temporary supervisor of the company, as well as the management of the company's affairs.

The goal of the business rescue practitioner is to reduce the debt burden, thereby allowing the company to continue trading. The practitioner will investigate the business, the company's affairs, the property situation, and the financial situation. They will consider whether there is any reasonable chance of the business being rescued.

The practitioner then draws up a business rescue plan, which is voted on by the creditors. If the creditors vote in the plan, the practitioner then implements and oversees the plan.

Who needs a Business Rescue Practitioner?

Any company that is currently in "financial distress" can apply for business rescue. "Financial distress" refers to commercial insolvency and factual insolvency. Commercial insolvency is when a company is unlikely to be able to pay any debts coming up in the next six months, while factual insolvency is when it seems a company will become insolvent within the next six months.

What are the benefits of Business Rescue?

The business rescue process provides the company with the opportunity to;

reorganise and restructure its matters,
arrange a payment scheme with creditors,
save jobs, and
allow the business to continue trading as an economically contributing entity.

How does a company go under Business Rescue?

A company can be placed under business rescue in one of two ways - either voluntarily, or under a High Court order when an affected person makes a formal application. In these types of situations, it is always best to go the voluntary route, as it gives you more control.