Financial Difficulties: If your company is facing severe financial stress, such as cash flow problems, increasing debt or an inability to meet its financial obligations, you may consider business rescue to avoid potential bankruptcy.
Operational Difficulties: If your company is experiencing challenges in its day-to-day operations, such as declining sales, loss of key customers, or inefficiencies in its processes, with the prospect of not being able to repay it’s debt in the next six months, business rescue may offer an opportunity for you to restructure and to improve your company’s performance.
Legal Requirements: Your company should initiate business rescue proceedings when experiencing financial distress, provided there exists a reasonable likelihood of successful rehabilitation. Company directors may face personal liability for failing to seek business rescue in a timely manner.
Our team is a dedicated group of financial specialists, attorneys, business strategists, and problem-solvers who bring extensive experience and genuine care to every crisis.
e understand that financial difficulties can feel overwhelming, but with the right guidance and proven restructuring strategies, even the most challenging situations can be transformed into sustainable success stories.
Don't let temporary setbacks become permanent failures – discover how our comprehensive business rescue solutions can help your company emerge stronger than ever.
We are a full-service business rescue practice specialising in offering Business Rescue services to companies operating in South Africa.
Under the Companies Act 71 of 2008, Chapter 6 establishes a formal process for companies experiencing financial difficulties. This legal framework serves two primary objectives:
Primary Goal: Enable the company to recover financially and resume profitable operations
Secondary Goal: Where recovery proves unfeasible, maximize creditor recoveries beyond what liquidation would yield
Companies may proactively enter the business rescue process when their directors determine that financial distress threatens the entity's viability. This self-initiated approach involves several key steps:
Board Resolution and Filing: Directors must pass a formal resolution acknowledging the company's financial difficulties and submit this decision to the Companies and Intellectual Property Commission (CIPC).
Practitioner Selection: Within a five-day window, the board is required to designate a qualified business rescue practitioner to oversee the process.
Stakeholder Notification: All parties with interests in the company - including creditors, employees, and shareholders - must be formally notified of the business rescue commencement.
Management Transition: Upon filing the resolution, operational control shifts from the existing management team to the appointed practitioner, who then initiates the restructuring process.
The business rescue process can also be initiated through judicial intervention when stakeholders petition the court system. This external route provides an alternative pathway for companies that may not voluntarily recognize their distressed status.
Eligible Applicants: Any party with a legitimate interest in the company's affairs - whether shareholders, creditors, or employees - may petition the court to impose business rescue proceedings.
Court Assessment: The judiciary will authorize such proceedings only after determining two critical factors: first, that the company faces genuine financial distress, and second, that realistic prospects exist for successful rehabilitation.
Alternative to Liquidation: Even companies already subject to winding-up proceedings may potentially access business rescue through court application, offering a possible alternative to complete dissolution when recovery remains viable.
The business rescue practitioner (BRP) is either chosen and appointed by the company's directors or is appointed through a court order. The BRP assumes comprehensive authority over the distressed company. This is the cornerstone of the entire business rehabilitation process.
Operational Control: The practitioner effectively displaces existing leadership structures, assuming complete managerial authority over all company operations and decision-making processes.
Financial Analysis: A thorough examination of the company's fiscal circumstances forms a critical early task, including identifying the root causes behind the financial difficulties that triggered the rescue proceedings.
Strategic Planning: The practitioner must formulate a comprehensive rehabilitation strategy that addresses the restructuring of business operations, outstanding obligations, and asset management to restore the company's viability.
The practitioner is vested with extensive legal powers necessary to effectively restructure the distressed company and maximize its chances of recovery.
Contract Management: The practitioner possesses discretionary authority to suspend existing contractual arrangements that predate the rescue proceedings, enabling the renegotiation of burdensome obligations that may hinder recovery efforts.
Financing Arrangements: Securing additional capital through post-commencement financing represents a crucial power, allowing the practitioner to negotiate fresh funding arrangements essential for maintaining operations during the restructuring period.
Stakeholder Engagement: The practitioner holds the authority to convene formal meetings with various stakeholder groups, including creditors and shareholders, to present the proposed rescue strategy and secure the necessary approvals for implementation.
