Business Rescue
Globally, companies find themselves in financial distress on a daily basis, giving rise to the need to restructure, reinvent and remodel the way they conduct their operations.
At SBRS, we take an integrated approach during the process of rescuing a company in distress. In fact, we become almost part of the company during proceedings, treating it as if it were our own.
With the inclusion of the business rescue process within the companies Act, (Act 71 of 2008, Chapter 6), South African companies that find themselves in financial distress are afforded the opportunity of a ‘’Stay’’. This constitutes a moratorium on creditors with claims against the distressed company.
It is at this point where we offer full value to our clients.
Our highly skilled and qualified business rescue team
has the ability to:
- Analyse the current situation
- Conduct due diligence
- Process the information
- Develop the best suited business rescue plan
- Implement and deliver the plan with minimum disruption to the company, its creditors and employees
Business rescue procedure
Once a company’s board of directors have resolved that the company is in financial distress, by way of valid board resolution together with all the supporting documentation required, or an order of the court (brought by an affected party) has been issued and filed with the Companies and Intellectual Property Commission (CPIC), the company is deemed to be in business rescue and that proceedings have commenced.
Once the company has filed for business rescue, a business rescue practitioner must be appointed within five days to take control of the business.
The following procedure will then take place:
1. Due diligence and analysis
A comprehensive due diligence is performed to establish the overall financial position of the company, and whether the opportunity exists to conduct a positive successful rescue.
By conducting this initial due diligence process much time and cost implications are circumvented once the distressed company enters business rescue.
2. Commencement of business rescue proceedings
The company officially enters business rescue proceedings once the prescribed documentation is complete and filed with the CIPC, after which the business rescue practitioner (BRP) is appointed. The BRP has to be appointed within five days of filing the business rescue documentation or as directed by the Court.
This administrative process is critical to proceedings and highly intensive.
3. Business rescue plan compilation
The comprehensive business rescue plan is compiled by way of an in-depth analysis of the company’s financial affairs and assets. Thereafter the BRP engages with all affected parties to finalise the drafted business rescue plan.
Affected parties are all creditors of the company and include the South African Revenue Service (SARS), financial institutions, suppliers, recognised trade unions as well as all other employees’ representatives that may not be represented by an official union. The business rescue plan is officially published for all affected parties to be observed.
It is fundamental that post Commencement Finance (PCF) is secured prior to before proceedings commence to ensure the timeous payment of the BRP and staff members during business rescue proceedings. Without PCF the business rescue process may prove to be futile.
4. Adoption and implementation of the business rescue plan
Once the business rescue plan has been agreed to and adopted by all or the majority of the affected parties and PCF is secured, the BRP is responsible for the implementation of the business rescue plan.
5. Substantial implementation
Business rescue proceedings are formally terminated by the BRP on the substantive implementation of the business rescue plan by way of filed notices to the CPIC terminating the proceedings and or the Court if the business rescue proceedings was so directed by the Court.
Strategic Business Rescue Solutions’ mission is to provide expert assistance and in-depth advice to companies seeking to improve their overall financial and operational performance.
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