Page 42 - MAC4861_2 Finance class slides part 2

BUSINESSES IN DIFFICULTY

Business rescue principles in terms of the

Companies Act

• The business rescue regime is an attempt to provide an

alternative to liquidating a near-insolvent company.

• A directors’ resolution that declares that the company

is in dire financial straits is required. An independent
person (called a ‘practitioner’) must also be appointed.

• The business rescue practitioner has the duty to

investigate the company’s affairs and then decide

whether or not there is any reasonable prospect of
rehabilitating the company.

• If the practitioner decides that there is such a prospect,

he must then prepare a business plan. After the

business plan is approved by the company’s creditors

(and shareholders, if their rights are affected) the
practitioner must then oversee its implementation.

42