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Revealed: The advantages and disadvantages of business rescue proceedings - Read THIS before you make a decision!

by , 28 March 2014
If your business is insolvent and you're still trading, you can restructure and reorganise it through business rescue. As with anything, business rescue has its pros and cons. And we believe you should have all the facts before you take this important decision. Here are the advantages and disadvantages of business rescue proceedings...

The good and the bad side of business rescue proceedings

Braam van Rensburg of Braam van Rensburg Business Rescue says there are various advantages and disadvantages attached to business rescue proceedings.

The advantages of business rescue are as follows:
 

  • There will be a moratorium in respect of creditors. This will give your business breathing space to work out a rescue plan without the ongoing pressure from creditors;
  • Business rescue proceedings come with the suspension and possible cancellation of contractual obligations;
  • There's a chance of better dividends to creditors than in a liquidation scenario; and
  • You'll save jobs and also have a better chance of creating jobs over the longer term.

So what's the downside of business rescue?

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Here's the bad side of business rescue proceedings
 

  • According to Van Rensburg, the present stigma surrounding business rescue and negative publicity could affect your business;
  • You could have problems finding the finance you need to implement the rescue plan;
  • You'll lose management control as everything will be handed to the business rescue practitioner.
  • There's the inevitable liquidation of the company if business rescue doesn't succeed; and;
  • You'll have to deal with the relatively high costs associated with business rescue.


Is business rescue right for you?

We can't tell you whether or not you should go for business rescue. But, we advise you to answer these questions before making your decision. They'll help you decide whether or not you need to consider business rescue. Allow with the advantages and disadvantages we've given, you'll know be able to decide what really is best for your business.



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