Creditors' rights and how to get your money out of a company undergoing business rescue
What should you do if your company, when performing the role of a creditor, needs to get the money back out of a client undergoing business rescue?
In this case, we'll look at the fact that during business rescue proceedings, creditors' claims
are ranked and paid in a certain order:
Read on to find out...
If the other company is your client, and it's going through business rescue, you'll feel the impact as well!
Keep in mind that you have the right to vote on the business rescue plan. During business rescue proceedings, creditors' claims are ranked and paid in the following order:
1. Business rescue practioners remuneration, expenses and claims arising from the business rescue practitioner;
2. Salaries and expenses relating to staff after the business rescue proceedings start;
3. The claims of secured creditors (debt that is secured by an asset) or lenders before business rescue proceedings start and secured claims by creditors or credit providers after business rescue proceedings start that is governed by Section 135(3)(a)(i) of the Companies Act;
4. Claims in terms of the Insolvency Act
24 of 1936.
5. Unsecured (not secured by an asset) claims after business rescue proceedings start;
6. Salaries and expenses due and payable to employees that became due before business rescue proceedings; and
7. Unsecured claims of creditors and credit providers before business rescue proceedings start.
PS: Does your CC follow the CC Act or the Companies Act?
If you're not 100% compliant with legislation for accounting officer duties, you'll face penalties.
Avoid this fate. Find the A-Z of accounting officer duties for Close Corporations here…