Business Rescue Proceedings

Our team of commercial attorneys assists companies by providing practical and commercial legal advice regarding business rescue proceedings, contingency planning, restructuring and insolvencies. We take a proactive and commercial approach to achieve the best possible outcome for our commercial clients.

We address all aspects of the business rescue process and utilise the expertise of our specialists from other practice areas, including tax, financial, litigation and employment law.

Restructuring of companies in financial distress is on the increase globally. The new Companies Act, No. 71 of 2008 (the Act) introduced business rescue as an option for reorganising and restructuring. This has far reaching effects on creditors, financial institutions, shareholders, employees and restructuring specialists.

Business Rescue proceedings 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;
• 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)).

Post-commencement finance is capital that is provided to the company once business rescue proceedings have commenced. According to the Act, any remuneration, reimbursement for expenses or other money relating to employment that becomes due and payable by a company to an employee during business rescue, is also considered to be post-commencement finance.

During business rescue proceedings, the company is permitted to approach a financier and utilise an asset of the company to the extent that it is not already encumbered.

Post-commencement financing and structuring is a specialised and technical matter that requires careful legal expertise. Our team is able to advise on the circumstances regarding financing and can also introduce the company to potential post-commencement funders.