WHAT IS BUSINESS RESCUE?
Business rescue proceedings are proceedings aimed to facilitate the rehabilitation of a company that is financially distressed by providing for the temporary supervision of the company, and the management of its affairs, business and property by a business rescue practitioner; a temporary moratorium (stay) on the rights of claimants against the company or in respect of property in its possession; and the development and implementation, if approved, of a business rescue plan to rescue the company by restructuring its business, property, debt, affairs, other liabilities and equity (section 128(1)(b)).
WHAT IS THE AIM OF BUSINESS RESCUE?
The aim of business rescue is to restructure the affairs of a company in such a way that either maximises the likelihood of the company continuing in existence on a solvent basis, or results in a better return for the creditors of the company than would ordinarily result from the liquidation of the company (section 128(1)(b)(iii)).
WHAT IS A BUSINESS RESCUE PRACTITIONER?
A business rescue practitioner is a person appointed, or two or more persons jointly appointed, to oversee a company during business rescue. While the Act defines a business rescue practitioner as one or more persons, the business rescue provisions of the Act do not necessarily refer to or support joint appointments. Furthermore, the word “person” in the Act includes a juristic person. It is therefore arguable, although unlikely, that a company can take appointment as a business rescue practitioner (section 128(1)(d)).
WHAT IS AN AFFECTED PERSON?
Affected persons are important roleplayers in the business rescue process. An affected person is a shareholder, creditor, employee (or their representative) or a registered trade union representing employees of the company. Affected persons have various rights throughout the business rescue process (section 128(1)(a)).
WHAT IS THE TEST FOR BUSINESS RESCUE?
The test for whether or not a company should be placed in business rescue is whether or not the company is financially distressed. The Act defines the words “financially distressed” (section 128(1)(f)) to mean that – it appears to be reasonably unlikely that the company will be able to pay all of its debts as they become due and payable within the immediately ensuing six months (commercial insolvency); or it appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months (factual insolvency)