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Need help? Follow these five tips to apply for business rescue!

by , 07 April 2015
You know that you need to follow a procedure when applying for business rescue. But do you know what steps you need to take to to follow the entire process correctly?

Read on to discover the answer

Here's how to apply for business rescue in five easy steps

Step # 1: As the board of directors, pass a resolution stating that you want to start business rescue procedures. If you have a business rescue practitioner in mind, you should include this in the resolution. Moreover, keep in mind you have to also include a statement  that explains why you're applying for business rescue.

Step # 2: Fill in a CoR123.1 form within five working days of passing the resolution. Go to http://www.fsp.co.za/downloads/CoR123.1.pdf for a copy of CoR123.1.

Use this useful tip: Include certified copies of the directors' IDs when you submit this form. Submit the completed CoR123.1 at your nearest CIPC (Companies and Intellectual Property Commission) offices.

Step # 3:Once you've done this publish a notice the resolution passed by the directors and a sworn statement describing the business rescue proceedings to all affected parties. Publish this in the newspaper or a local paper.

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Step # 4: Appoint a business rescue practitioner within two days of filing the business rescue proceedings – fill in a CoR123.2 form and submit this to the CIPC that will show who you have appointed as a business rescue practitioner. Go to http://www.fsp.co.za/downloads/CoR123.2.pdf to download this form.

Step # 5: As a final step, publish a notice in the local newspaper or press of the appointed business rescue practitioner within five days of appointing him. There is no specified format you must follow. You just need to say who the appointed business rescue practitioner is.

Use this tip: Besides publishing the notice, make sure you notify affected people in discussions, i.e. Creditors, shareholders, trade unions and employees.

Remember that you must stick to the prescribed time-frame for filing and performing certain procedures (Companies Act). If you don't, the courts will scrap your application. And you can't apply for another business rescue for three months – unless the court approves it!

You should also know that business rescue isn't right for every business because, for instance, in case you run a property development business, business rescue may not help!

This is a case in which, since you've left it too late, you'll have to liquidate before the proceedings are complete. However, if you're a retailer and you have stock to sell that will tide you over during proceedings, it's a viable step. The business rescue process takes three months to complete. So if you're going to have to liquidate in less than three months, there's no point in applying for business rescue!

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Need help? Follow these five tips to apply for business rescue!
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