What is Business Rescue?

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)

Legal Advisor

Subscribe now
Read More

More Articles

Business Rescue FAQ

Wanting to stop a business rescue? Business rescue proceedings are brought about to facilitate the rehabilitation of a company that is financially distressed and the proceedings offer a very useful alternative to the liquidation of a company. So you should be careful to ensure that you have good grounds to set aside the proceedings. Some of the…

Deregistration of Trusts

Trust registration Trusts must be registered with the Master in whose area of jurisdiction the greatest portion of the trust assets are situated. If more than one Master has jurisdiction over the trust assets, the Master in whose office the trust was first registered will continue to have jurisdiction. What does the Trust Property Control…

Where must deceased estates be reported?

Wherever the deceased was living in the Republic of South Africa, the estate should be reported to the Master of the High Court in that jurisdiction. In other words if the deceased was living in that area for 12 months prior to his/her death, then the Master’s office overseeing estates in that region should open an…