Liquidation, Insolvency and Business Rescue

Description

Chapter 6 of the new Companies Act first introduced it to the South African legal landscape. This chapter of the act allows those SA companies in “financial distress” or trading in insolvent circumstances to file for business rescue and, with the assistance of a business rescue practitioner, reorganise and restructure the business with the aim of returning it to a more stable and profitable entity.
 

The practitioner is required to reduce the debt burden in order to enable the company to continue trading. They are required to investigate the company’s affairs, business, property and financial situation, and thereafter consider whether there is any reasonable prospect of rescuing the company.

A business rescue plan must be drawn up by the practitioner and will then be put to a vote by the creditors.
 
Once successfully voted in, the business rescue practitioner must implement and oversee the business rescue plan in an attempt to save the company.