EDITORIAL: Business rescues drag on
Although the success rate is low, it is often a better way forward for distressed companies
Introduced in 2011, business rescue has become a commonplace term in SA’s corporate landscape. But as familiar as it might be, perception of its success is poor and, increasingly, business rescue proceedings appear to be inordinately long and harrowing. A provision of the Companies Act, business rescue is intended help rehabilitate financially distressed entities. Once in business rescue, a temporary supervisor, a business rescue practitioner, is appointed to take over the management of the company, which, under this legal provision, enjoys a temporary stay of execution from creditors’ claims. Meanwhile, the business rescue practitioner is responsible for compiling a plan which sets out the best way to rescue the business. Once the majority of creditors vote in favour of the plan, it can be executed. It’s an opportunity for a business to step back, rethink, restructure and hopefully secure a better return for the creditors and especially employees. As at March 2018, according...
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