Business rescue, as defined by the Companies Act 2008, aims to facilitate the rehabilitation of a company that is “financially distressed” by providing for
1. the temporary supervision of the company and management of its affairs, business and property by a business rescue practitioner, and
2. a temporary moratorium (“stay”) on activities carried out by the company as well as enforcement proceedings brought against the company (without the consent of the BRP).
How can Business rescue be initiated ?
By the board of directors of the company
By an application to court when the business is financially distressed by various affected persons (including shareholders, creditors, registered trade unions and employees).
What is the function of the BRP?
A business rescue practitioner is appointed to oversee and supervise on a temporary basis the management, affairs and business of the company and to devise, prepare, develop and implement a business rescue plan. The plan will be implemented if approved by creditors and shareholders who have to vote on the plan.
Do the directors of an entity under BR have any residual capacity or authority ?
Each director of the company:
will continue to exercise the functions of a director subject to the authority of the practitioner duly appointed
must assist the practitioner that is expected to operate the company and to continue to run its business
may delegate any power or function to the practitioner duly appointed that would have full management control of the company in substitution for its board and pre-existing management.
Jacqui Smith (LLB)