Bentley Attorneys is a specialist credit law and debt recovery law firm, starting as Bentley Warne Attorneys in April 1994 and then in September 1998 became Bentley Attorneys. Bentley Attorneys has over the years developed a strong mix of commercial clients, from small businesses to the largest private company in the country, J.S.E. listed clients and banks. We service commercial clients who are not looking for a general law practice where debt recovery matters take a back seat and who also require attorneys with an in depth knowledge of the relevant legal areas of law with developments such as the National Credit Act, the Companies Act and Consumer Protection Act. Our approach to law is innovative and proactive.
Business Rescue proceedings entail the process of attempting to rehabilitate financially distressed companies, and find their legislative authority in Chapter 6 of the Companies Act No. 71 of 2008
South Africa Corporate/Commercial Law
Business Rescue is therefore an alternative legal route for a financially distressed company, as opposed to liquidation proceedings in which the company is liquidated and ceases trading, its assets then being sold and distributed to creditors following an order of preference. So while liquidation aims to secure an orderly and equitable outcome for the highest number of creditors, Business Rescue seeks to save distressed companies from financial ruin and ultimately closure.
Liquidators administer liquidations under the authority of the Master's Office while Business Rescues are administered by Business Rescue Practitioners ("BRP") under the authority of the Companies and Intellectual Property Commission.
Section 128(1)(b) of the Act defines the purpose of Business Rescue proceedings as threefold:
Business Rescue proceedings may be commenced in three ways:
( 2 and 3 above are known as a compulsory Business Rescue).
Importantly, if such proceedings have commenced by company resolution, the Act allows an affected person to apply to court and have the resolution set aside. Once Business Rescue proceedings have commenced voluntarily and are objection free, the company is obliged to appoint a BRP who satisfies the requirements set out by the Act.
Alternatively, in instances of compulsory Business Rescue a court may appoint an interim BRP and in cases where a court orders a removal of the BRP, the court must appoint an alternate BRP. However, in both of the above instances, such appointment is subject to ratification by "affected persons" or persons with a majority of the independent creditors voting interests.
The test of whether a company should be placed under Business Rescue is whether or not the company is:
If implemented competently and in the best interests of the company, Business Rescue Proceedings may therefore provide a lifeline to distressed companies and help secure their futures from the brink of liquidation. Keeping in mind the purposes of the Act, wherever practical and possible, it is also preferable to attempt Business Rescue over a quick resort to liquidation. However, it must be kept in mind that such proceedings must serve their purpose and flow from a plan that can actually achieve the goals contemplated by such proceedings. If not, such plans are simply, ". unlikely to achieve anything more than to prolong the agony. " (Southern Palace Investments at para 24)
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