The new Companies Act has devoted a great deal of time to the restructuring of companies in financial distress.  This is dealt with in Chapter 6 of the new Companies Act, 71 of 2008 read with the Companies Amendment Act and the Regulations.  Any company that is trading under insolvent circumstances and which is financially distressed can reorganise itself and restructure.  Obviously this affects the creditors, financial institutions (banks etc.), shareholders, employees and practitioners as defined in the Act,  We are able to advise our clients on all aspects relating to the restructure and business rescue and how the process is initiated and general advice regarding guidance to creditors, strategic decisions, what to consider before casting your vote and in particular when it comes to financing transactions in the business which is in the process of undergoing or implementing the provisions of Chapter 6 of the Companies Act of 2008.  There are a number of time constraints and set time periods which do not give much leeway and as a result speed is the essence in the business rescue process.  It is vital that all those persons interested or involved in the process are properly represented by someone competent in that field of the law.  We have the necessary expertise to advise you correctly and our main objective is to ensure that creditors receive the greatest return possible in the process.  If business rescue is either not recommended by us or fails then we will be able to assist you in the liquidation process.  Amongst other matters, we will be in a position to advise you on such matters as how the business rescue process is initiated whether or not the application for business rescue is preferable to liquidation, whether it is advisable to oppose the business rescue process and matters relating to financial assistance after the process has commenced, the protection of property interests, such other things as remuneration of the rescue practitioner and whether or not the business rescue plan should be approved.  If the company proceeds to insolvency we can advise you on such matters as meetings of creditors, proof of claims, inquiries, reckless trading and insolvency proceedings.  In fact the main crux and interest of our firm is that concerning the law of insolvency. 


How is the process initiated?

The process is initiated by the company filing a resolution with the Commissioner in terms of which it resolves that the company voluntarily begins business rescue proceedings under supervision on the grounds that it believes that the company is financially distressed and there appears to be a reasonable prospect of rescuing the company.

After the business rescue proceedings have been initiated any affected person may be object and may apply to court to set aside the business rescue proceedings on the basis that there is no reasonable basis for believing that the company is financially distressed or that there is no reasonable prospect of rescuing the company or that the company has failed to satisfy the procedural requirements. 

An affected person may apply to court at any time for an order placing the company under supervision and commencing business rescue proceedings.  There are a number of requirements which must be adhered to.  There is no need for our clients to be fully au fait with all these procedural requirements as we are highly experienced in these matters and we will ensure that they are all executed correctly and expeditiously. 

After the initiation of the business rescue proceedings the Commissioner will appoint a practitioner to seize control of the company and control the company whilst it is under the status of business rescue. 

Consequences of business rescue proceedings

During business rescue proceedings no legal proceedings including enforcement actions against the company or in relation to any property belonging to the company, or lawfully in its possession, may be commenced or proceeded with in any forum without the written consent of the practitioner or with leave of the court or a set off against any claims by the company in any legal proceedings or criminal proceedings against the company or concerning any property or right over which the company exercises the powers of a trustee.

During the rescue proceedings the company may dispose of property in the ordinary course of business and in any bona fide transaction at arms length or in a transaction contemplated and undertaken as part of the implementation of the business rescue plan that has been approved. 

In addition the business rescue proceedings will have an effect on post-commencement finance and the company under rescue may obtain financing and these claims pursuant to the financing will rank preferent. 

There are a number of affects on the employees, contracts and on the shareholders and directors and we will be in a position to advise you on all these matters when consulting with you.


What do we assist you with?

If you are seeking to place your company under the business rescue procedure we will draft all the documents necessary including the resolutions and will file these with the Commissioner on your behalf and in addition we will launch any applications to the High Court as may be necessary in order to ensure that the provisions of the business rescue are implemented and that you succeed to the relief and moratorium and other matters dealt with under law of business rescue.

We will be able to advise you on the financial position of the company and we will advise you whether or not seeking business rescue is appropriate and what the practitioner will charge and whether or not we feel that the company is distressed.

We will analyse all the financial aspects of your company and we will analyse the structure of your company, the makeup of your creditors, any pending litigation, whether the company is able to pay its creditors or some of them and we will in turn advise you whether your company is under distress and whether business rescue is appropriate.