Business Rescue & Turnaround
The Better Alternative
Has current circumstance got you staring down the barrel of insolvency and liquidation? Business Rescue may be a better alternative and allow your company the breathing space and protection it needs to survive….
A distressed entity that in the ensuing six months is unlikely to be able to pay all its debts as they fall due and payable, or if it appears likely that the Company will become insolvent, is a candidate for business rescue.
Business rescue presents South African companies in financial distress with a second chance; the possibility of continuing to trade and avoiding job losses with the significant knock-on effect on the South African economy. While not possible in all circumstances, a successful business rescue will always be preferable to a liquidation process – for all stakeholders.
What is Business Rescue?
Business rescue proceedings are formal legislated proceedings, under Chapter 6 of the South African Companies Act 71 of 2008 (“The Companies Act”), that are aimed at restructuring the affairs of a company in such a way that either maximises the likelihood of the company continuing in existence on a solvent basis, or results in a better return for the creditors of the company than would ordinarily result from the liquidation of the company. It provides for the temporary supervision of the company by a business rescue practitioner; a stay on the rights of claimants against the company which arose prior to business rescue or in respect of property in its possession; and 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.
"SIMPLY PUT, BUSINESS RESCUE OFFERS PROTECTION OF A COMPANY WHILE GIVING TIME AND BREATHING SPACE TO REORGANISE ITSELF WITH STRATEGY AND NEGOTIATED COMPROMISES (ON DEBT) TO SEE IT THROUGH FROM A PERIOD OF FINANCIAL DISTRESS BACK TO PROFITABILITY"
What are the benefits?
Business rescue provides breathing room for a company as pre-existing creditors receive a moratorium on the rights to all claims and legal proceedings against the company. The company is permitted to continue trading throughout the rescue process giving it the best possible chance of returning to a more stable and profitable position.
Business rescue provides businesses with a real chance of avoiding a liquidation process. Placing companies into liquidation will most often result in an immediate loss of the ability to generate income, with subsequent employee job losses, not to mention the general negativity and stigma attached to such liquidation procedures. The net result is unlikely to be positive for stakeholders and the South African economy as a whole.
Business Rescue attempts to secure and balance the opposing interests of creditors, shareholders and employees. It encapsulates a shift from creditors’ interests to a broader range of interests. The thinking is that to preserve the business coupled with the experience and skill of its employees, may, in the end prove to be a better option for creditors in securing full recovery from the debtor.
Why Current Advisory?
At Current Advisory we believe that every business deserves a chance to be rescued. Our primary motivation in all business rescue proceedings is to turn the business around, and as such we focus as much on the long-term strategic plan as we do the immediate actions required to effect rescue proceedings and avoid liquidation.
Our team is made up of business strategists, accountants, entrepreneurs, restructuring specialists and business rescue practitioners, with a network of additional resources to call on as required. Each engagement is unique and we will tailor an approach and create a plan that is specific to your business and will help it become stable, sustainable and profitable once more.