How business rescue works
When a company goes under, jobs are lost and creditors/debtors lose out on moneys due to them. This ripple effect is negative for business and our economy. That's why the business rescue was introduced by the Companies Act: It's a means to prevent insolvency by reorganising flailing companies. Here's how it works.
Step by step: How business rescue works
We've already told you how to identify whether or not you need business rescue, and also how to go about getting it. But do you know what the business rescue process entails?
Here are the four steps involved.
Once you start business rescue proceedings, your appointed business rescue practitioner must investigate your company ASAP.
He has ten days to meet with creditors, to let them know about the prospects for rescuing the business.
Within 25 days of his appointment, the practitioner must publish the business rescue plan for the company.
Ten days after publishing the business rescue plan, the practitioner must meet with creditors to discuss the plan.
Of course, once the business rescue plan has been achieved and the business is out of the danger zone, the rescue practitioner will file a final report and declare the rescue proceedings implemented substantially, if not completely.
Otherwise, rescue proceedings end when the court:
Orders it; or
Decides that business rescue isn't working and declares that the company must be liquidated.
Now you know what to expect if you're considering business rescue.