Does Your Business Need Rescue?

For Companies About To Liquidate

Companies going into liquidation may need Business Rescue
Business Rescue is a new mechanism that allows companies to be rescued if they are in financial distress. Business rescue looks to rehabilitate companies instead of placing them into liquidation, especially if it’s prematurely, and a company can and should be saved. 

This is especially crucial for a country like South Africa where job creation as well as sustainable growth in the economy has a pivotal role in the future of South Africa.

The objective of Business Rescue is to buy time, precious time that allows a company to get back onto its feet and transform it into a viable going concern. Essentially Business Rescue asks the question – why liquidate a company if it can be rescued?  

Is this not better for all affected persons such as the owners, creditors and employees and other stakeholders?  Is a successful business rescue not a win/win for all?  A rare commodity in the competitive and complex modern commercial reality.

So which companies should look to Business Rescue?

As a rule of thumb, if a company cannot fund its creditors immediately as they arise, or with ease in the ordinary course of business for a forward looking six month period, it is probably in need of business rescue. 

Before the launch of the New Companies Act in 2008, a company in a financially 
compromised position would have had to face  likely liquidation, however, it is now recognised that to reorganize, stabilise and rehabilitate a company as a going concern is a better option for the stakeholders and affected parties that to liquidate it prematurely.
In order to avoid liquidation, a company has the option of consulting with, and employing the services of, an independent Business Rescue Practitioner to steer it through a legal grace period where its creditors are prevented from threatening its core business. The company itself takes responsibility for the process, having direct involvement with the review and restructure, as well as funding the process. 

The Beauty of Business Rescue

While a company is undergoing Business Rescue, no legal proceedings against it can take place. This allows time for the reassessment of the business’ problems and allows for measured steps, such as restructuring, and financing to take place.  Time also allows for the customisation of a business rescue plan for strategic direction - it allows a company the scope for improving its management structure, retaining knowledgeable staff and renewing corporate value.  In other words, a company has the opportunity for some relief from creditors by implementing a plan to render it profitable again. 
The process is undertaken in consultation with the creditors and is therefore inclusive.  This inclusion prevents much of the traditional negative stigma that is attached to undergoing liquidation, or even judicial management.
A sound Business Rescue Plan should take into account all stakeholders as well as the company.

First Steps to Business Rescue
There are two ways to undergo Business Rescue; through the Order of a Court on application; or on the lodging of an appropriate resolution of the directors of the company seeking to undergo the process.
The Business Rescue process allows a company five days to appoint a certified practitioner. The analysis, development and presentation of the Business Rescue Plan must happen shortly after. In light of this, it is imperative that companies choosing to undergo Business Rescue have direct access to practitioners.

Ryan Fisher is an experienced Business Rescue Practitioner who is supported by a strong team of consultants and chartered accountants. As a team, B Doyle Business Rescue offers value added service and support to businesses and stakeholders at the prescribed rates as determined by the Act.

For more info, please contact: Veruska De Vita
Twiga Communications
011 024 3983

Or:Ryan Fisher

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This edition

Issue 90


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