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Madelyne_Mrt-pic5By imposing a moratorium on the enforcement of creditor’s claims throughout the duration of Business Rescue Proceedings and through the formulation and implementation by a Business Rescue Practitioner of a Business Rescue Plan, the Business Rescue procedure set out in the Companies Act No. 71 of 2008 affords South African companies that are financially distressed the ability to reorganise and restructure their obligations whilst providing breathing room from creditors.

The provisions are specifically designed to assist businesses that, although under pressure, are still capable of being rescued, given the opportunity.  One of the many benefits of this procedure and why it is frequently a preferred alternative to liquidation (whereby creditors, depending on their class, often receive very little, if anything, out of the wound-up company) a company in Business Rescue, through its Business Rescue Practitioner, engages with its creditors with a view to restructuring its obligations, thereby limiting damage to relationships with creditors.

Written by Brent Wicks.

Brent is an admitted attorney with right of appearance in the High Court of South Africa. Since his admission in June of 2010, he has practised predominantly as a civil litigation and commercial law specialist. Brent recently completed an Advanced Course in Business Rescue Practice presented by the Law Society of South Africa (LSSA) and UNISA and is ready to assist in any and all matters concerning Business Rescue. He is also interested in Shipping and Maritime Law and is studying towards an LLM in Shipping Law at the University of Cape Town.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

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