Business Rescue serves different purposes for a company. Below is an explanation of the business rescue proceedings. This will begin with the company’s recognition of its need for business rescue. And it will conclude with the closing of the business rescue procedure itself.

Recognising the Need for the Business Rescue Procedure

The business’ affected parties must recognise that the company is in “financial distress”. The same goes for the court. The courts must also recognise a reasonable prospect for rescuing the company. Then, a representative of the company can file for the business rescue procedure to begin.

Before filing a request, the board and creditors must willingly pass a resolution. Specifically, they must vote to this end to begin the business rescue proceedings.

Thanks to the recent introduction of Business Rescue, it can be a difficult process to understand. But, the information you need to know is out there.

The affected parties must then receive a “notice of resolution” within 5 business days. The affected parties include shareholders, employees, and creditors of the company. A business rescue practitioner is then appointed by the court. He will oversee the company during the business rescue proceedings.

Filing of a “Notice of Appointment of Practitioner” must then occur after 2 business days. A notice is then sent to the affected parties after a further 5 business days have passed. At this point, a court order to begin the business rescue procedure commences.

The company must file the resolution and notify affected persons, or it will become void. Failing this, the company must wait 3 months before filing another resolution.

For any established business, it’s crucial that the company may be able to gain finance from banks and other institutions.

The Courts Recognition of a Need for Business Rescue

The court may also recognise that a company is financially distressed. It can also recognise if there is a reasonable prospect for business rescue. If such is the case, an affected party must submit a request to begin the business rescue proceedings.

The process following this follows a similar method and timeframe. After all necessary filings and appointments, the business rescue procedure can begin.

Timeline and Implementation of Business Rescue

As soon as possible, the directors must provide the practitioner with relevant documentation. Primarily, this documentation includes all the financial books and records of the business. The practitioner must then investigate the affairs and standing of the company. This is the beginning of the business rescue procedure on part of the practitioner. After a defined period, the director must provide him with a letter of statement of affairs. After their appointment, the practitioner must attend the first meeting of creditors. He must also attend the first meeting of the parties representing the company.

25 Business days after appointment, the practitioner must prepare a rescue plan. The plan’s creation is a part of the business rescue proceedings. The company must then publish the plan. After 10 business days, a meeting will take place where the company votes to adopt the rescue plan.

Upon approval, the practitioner will enact the plan. After enacting the plan, the practitioner must file a Notice of Substantial Implementation. This makes up one of the functions of the business rescue procedure.

Upon rejection, there are several options available to the practitioner. He can seek a vote of approval to prepare a revised plan that is more in line with the affected parties’ interests. He can also inform the company that they can apply to the court to set aside the result of the vote.

The business rescue proceedings conclude after the following have occured.

• Filing the Notice of Substantial Implementation.
• A court order that sets aside the resolution.
• Court order that sets aside the court order that began the proceedings.
• A court order for liquidation. This occurs after determining that there is no longer reasonable prospect for rescue.
• A Notice of Termination of the business rescue procedure. This occurs for a specific reason. Eg, discovery of fraudulent practices within the company.
• Rejection of the proposed rescue plan, without extension of the proceedings.

Corporate Business Rescue are professionals and leaders in our field. Contact us for queries.