The business rescue plan is the plan enacted during the business rescue procedure. If approved, the business rescue practitioner implements it. The plan details how the practitioner plans to rescue the financially distressed company. This plan serves as the culmination of the business rescue proceedings.

Here, we will expand upon the different aspects involved in the business rescue plan. Such as its place in the business rescue procedure, its aims, and its goals. Through this, we will also discuss what each plan should contain.

Contents of the Rescue Plan as Per the Business Rescue Procedure

Section 150, Companies Act 2008 states what the rescue plan must contain. As per business rescue procedure, it must contain a complete list of business assets. Additionally, it must have enough detail to help affected persons in deciding whether to accept or reject the plan. It also includes information relating to creditors, assets, company securities, and more. This plan exists as a part of the business rescue proceedings.

On the whole, the means to “rescue” the financially distressed company also exists in the plan. If approved, the practitioner enacts the business rescue plan. They must draft this plan and present it within a given time frame.

Adopting the Rescue Plan within the Business Rescue Proceedings

A “proposed” rescue plan needs approval on a preliminary basis. As a part of the business rescue procedure, this approval exists as a part of a vote. This vote must be on the part of the creditors. Within the business rescue proceedings, the approval requires 75% of the creditors’ approval.

Additionally, it is also when the votes in support of the plan include at least 50% of the independent creditors’ voting interests. The plan may reach approval, done on part of the financially distressed business.

Occurrences After Adoption of the Plan on Part of the Financially Distressed Company

After approval of the business rescue plan, it becomes binding on the company itself. As well, it becomes binding for the creditors and company securities holders. Within the business rescue procedure, this plan becomes binding.

Upon enacting the plan, creditors lose several rights during the business rescue proceedings. They are unable to enforce debt relevant to the financially distressed company. This includes debt that arose before beginning the business rescue. This is unless the plan states otherwise.

Rejection of the Business Rescue Plan

Within the business rescue procedure, rejection of the plan may occur. Section 153 covers the situation in which rejection of the rescue plan occurs. If rejected, the practitioner may seek approval from voting interest holders to prepare and publish a revised plan. The company can apply to court to set aside the result of the vote on grounds that it was inappropriate.

If this occurs, the practitioner files termination notice of the business rescue proceedings. Also, any affected person may make a binding offer to buy the voting interests of another party. This applies to persons that opposed the adoption of the plan. The practitioner will determine the value of this on request.

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