practitioner Leslie Matuson of Matuson & Associates was appointed to Meltz in mid-February, and says the business rescue
process can be successful, but time is of the essence in recapitalising or finding a buyer, says Moneyweb
So while being placed under business rescue is usually seen as a bad thing, it actually offers hope.
Because business rescue beats facing liquidation.
And the Tax Bulletin
says business rescue
could be indirectly responsible for the 71% drop in local year-on-year liquidation
figures in 2011.
So it's crucial – but you'll still have certain financial obligations to meet.
For example, you'll still meet the requirements of the Vat Act
by accounting for input tax
and output tax
if your business is placed under business rescue
, says FSP Business
You'll still have to meet these financial obligations if you're place under business rescue… but you could see some money back from SARS for doing so!
You'll still have to pay back debts owing to your suppliers going a year or more.
For example, if you haven't paid the full amount for a previously claimed input tax deduction within 12 months, you'll need to account for output tax for the amount still outstanding.
But this is a good thing.
Because one you've paid it, you can claim an input tax deduction for this from SARS, equal to the tax fraction of the amount subsequently repaid.
So you'll even get some money back from SARS!
The Business Day's BD Live
website adds that just more than half of all business rescue
applications result in a happy outcome, steering away from liquidation
But beware of applying for business rescue if your company doesn't face liquidation without it.
You'll get in trouble for applying for business rescue if you don't really need it…
Because the courts are already dealing with the abuse of the business rescue system, where companies are simply looking for a 'debt holiday' and to just restructure their credit arrangements.
This could result in penalties like hefty fines you just can't afford, so don't even consider it.
There you have it. Business rescue could be just what you need to turn around the dismal financial state of your business.