South african companies that are financially distressed in south africa. Business means the business of the company, being that of contract manufacturing and packaging of cosmetics, beauty products and toiletries otherwise. As a result, chapter 6 of the new companies act, no. Business rescue plan prepared and published in terms of. Business rescue south african institute of professional. The suitability of south africas business rescue procedure in the. If business rescue proceedings have commenced by way of an application to court, the organisation may not adopt a resolution for its liquidation until business rescue proceedings have terminated notification to all affected persons within five business days of the date of the order s18 business rescue seminar may 2017 18. Nov, 2012 all in all, i would say that there are about 35 judgments relating to business rescue which every practitioner or business with an interest in business rescue, should read. It was retained in the south african companies act 61 of 1973, even though the master of the then supreme court recommended its abolishment. On this reading, the court found that remuneration of the business rescue practitioner and the expenses incurred during business rescue proceedings, to the extent that these have not been paid during business rescue proceedings and during liquidation, can be paid only after the costs set out in s 97 have been paid. Overview of the south african business rescue process by karabo motshwane. The most important cases dealing with business rescue. Rescue in south african company law by anneli loubser submitted in accordance with the requirements for the degree of doctor of laws at the university of south africa promoter.
At first sight of financial distress an organisation should apply for. Please note that you should refer to your study guide for the precise scope of the corporate and business law syllabus on business rescue proceedings. What are the indicators of a successful business rescue in. In order for an application for business rescue to successfully suspend commenced liquidation proceedings, it must be served on the companies and intellectual property commission cipc, together with all affected persons in terms of the companies act, no 71 of 2008 act. At first glance, this statistic may seem less than impressive. Rescue your business with financial advice business. Business rescue proceedings in south africa this article considers the meaning of business rescue and provides some recent interesting cases on business rescue proceedings. Business rescue provides companies in financial distress with the opportunity to reorganize, strategize, and. In spite of its importance, there is a seemingly low rate of success of. Chapter 6 of the companies act, act 71 of 2008 new act introduced business rescue to the south african legal system.
The business rescue mechanism of these countries represents the latest developments internationally. Robert appelbaum and karl gribnitz have published the first book in south africa dealing with the intricacies of business rescue and compromise offers, incorporating colours and shapes into their system to demystify the act. This position was confirmed in the gauteng local divisions decision handed down on 10 march 2016. A brief overview of international standards of best practice in insolvency and corporate rescue models applicable in jurisdictions such as the us, the uk, canada and australia serves to set the bench mark for the establishment of a workable business rescue regime for corporate south africa. Company means group five construction proprietary limited, registration number 197400316607, a company incorporated in accordance with the laws of south africa, at present under business rescue proceedings. Chapter 6 of the companies act 71 of 2008 has introduced business rescue to the south african legal landscape. Business rescue proceedings commenced in accordance with section 1291 of the companies act. The south african companies act 46 of 1926 introduced judicial management as a statutory corporate rescue procedure for companies to be used before liquidation, where appropriate. It is submitted to the university of the witwatersrand in. Many companies are not candidates for business rescue. Company means basil read limited, registration number 196200236, a company incorporated in accordance with the laws of south africa, with its registered address at 7 romeo street, hughes. In south africa, owners of businesses that had at any stage traded insolvently i. While the act defines a business rescue practitioner as one or more persons, the business rescue provisions of the act do not necessarily refer to or support joint appointment. This guide will give you an overview of how business rescue legislation works and how it may be applied to help rescue a company that is in financial distress.
Advice for business rescue in south africa merchant factors. Faculty of lawt learning programme in business rescue. The recent introduction of business rescue has brought south africa i n line with international insolvency practices, by establishing statutory corporate rescue. The most important cases dealing with business rescue don. Pretorius of the university of pretoria, as to why the statistics reflect a very skewed position of the success of business rescue in south africa. Business rescue statistics must be read in context moneyweb. In this publication, dr eric levenstein examines the practical challenges of business rescue implementation in south africa and particularly the development of legal precedent, thinking and interpretation of the provisions of chapter 6 of the 2008 companies act. Business rescue proceedings attempt to rehabilitate businesses that are in financial distress. In studio with garry and team is adriaan smuts ca sa and advocate of the high court of south africa, along with caitlin gottschalk bcom llb, discussing business rescue in practical terms. South african, senior business rescue practitioners on the indicators of. The development of business rescue in south african law. This publication sets out the law applicable to business rescue procedures in south africa.
Business rescue news and media south africa brx articles. They are for ailing corporations, which given time will be rescued and become solvent. Business rescue plan prepared in terms of section 150 of. Marsden means piers michael marsden, a business rescue practitioner as contemplated in regulation 126 to the companies act. Lexisnexis south africa combines the best of local knowledge in butterworths with leadingedge online solutions. In the coming weeks, i will provide a summary and analysis of each one in turn.
During this time, the appointed practitioner will oversee and supervise the companys affairs. The south african business rescue regime was introduced with the enactment of the new. An introduction to werksmans approach to business rescue restructuring of companies in financial distress is on the increase globally. Welman vs marcelle props south gauteng high court business rescue are neither for terminallyill nor chronicallyill close corporations. Business rescue plan prepared in terms of section 150 of the. Business rescue in south africa follows the regulations and requirements of the act. Association of south africa basa, the independent business rescue association of south africa ibrasa, the south african restructuring and insolvency association saripa and the turnaround management association southern africa npc tmasa.
Business rescue and the companies act corporate business. What are the indicators of a successful business rescue. Company means tyre corporation support services pty ltd, registration number 200401741707, a company incorporated in accordance with the laws of south africa, with its registered address at. Business rescue, in terms of chapter 6 of the companies act no 71 of 2008, is still relatively new to the south african business environment. South african companies which are financially distressed or which trade in insolvent circumstances in south africa now have an opportunity to reorganise and restructure. Companies act means the companies act 71 of 2008, as amended. The ranking of the business rescue practitioners claim in. This has far reaching effects on creditors, financial. This has far reaching effects on creditors, financial institutions, shareholders, employees and restructuring specialists. Easy for everyone this unique book has a wide audience, ranging from a business person who needs a navigation guide and. In the current economic downturn, south africa can ill afford a repeat show of the failed. The suitability of south africas business rescue procedure. Brp mean the business rescue practitioner appointed in terms of section 1293b of the companies act, being mkhombo.
The novelty of the regime is challenged by a lack of formal training, an issue the university stands at the forefront of addressing. The advanced short online course in business rescue practice is a joint initiative between the law society of south africa and the university of south africa unisa. All in all, i would say that there are about 35 judgments relating to business rescue which every practitioner or business with an interest in business rescue, should read. Trading insolvently is often regarded as normal business practice in south africa, as long as the business is able to fulfill its debt obligations when they fall due. The companies and intellectual property commission cipc has, on 28 june 2017, accredited the south african institute of chartered accountants saica as a professional body for business rescue practitioners in terms of section 81 of the companies act, 2008. A business rescue practitioner is a person appointed, or two or more persons jointly appointed, to oversee a company during business rescue. Business rescue provides south african companies with a powerful mechanism to adapt and navigate through the turbulent economic conditions we now face. An appraisal of the new south african business rescue. The south african economy is everchanging, and the need to adapt in response is essential to any thriving company.
Aug 20, 2018 business rescue commenced in accordance with section 1291, read with section 21ai, of the companies act. South african business rescue procedure book set to launch. Although south africa currently lags behind the rest of the world when it comes to business rescue regimes, it is ironic that south africa was one of the first countries to actually introduce a business rescue regime in the form of judicial management. Business rescue commenced in accordance with section 1291, read with section 21ai, of the companies act. In south africa lexisnexis has been assisting companies and professionals to remain abreast of changing legislation and shifts in the regulatory environment for over 80 years, using leadingedge technology, tools and online solutions. There will be an assessment of the development of business rescue starting from judicial management right through to business rescue in terms of the companies act of 2008. For the moment, however, they can be downloaded here.
Business rescue provides companies in financial distress with the opportunity to reorganize, strategize, and devise reorganization measures that are useful. Short learning programme in business rescue over the past few years the restructuring of companies in financial distress has become a global trend and a key topic of debate. In line with this trend, chapter 6 of the new companies act, no. At first sight of financial distress an organisation should apply for business rescue. The concept of business rescue was introduced into south african corporate law through the enactment of ch 6 of the companies act 71 of 2008 the companies act and is similar to judicial management contained in the old companies act 61 of 1973. South african journal of economic and management sciences. However, often businesses fall victim to the harsh financial reality that not all companies can thrive in our economy. Business rescue came into effect in south africa in 2011 under chapter 6 of the new companies act. How does business rescue impact employees, creditors, owners etc. Cliffe dekker hofmeyr suspending liquidation proceedings. The business rescue process is only initiated if the company is financially distressed.
Tma sa business rescue turnaround management association of south africa has 246 registered members tma sa members directory business rescue practitioners turnaround consultants search users. They should in fact be placed into liquidation from the very outset. Rescue your business with financial advice business rescue. Notice 2 of 2019 guideline for the application for licencing as a business rescue practitioner, 49 kb pdf. A guide to business rescue prepared by werksmans attorneys a guide to business rescue 1. A guide to business rescue prepared by werksmans attorneys. Business rescue in south africa corporate business rescue.
Tma sa business rescue turnaround management association of south africa has 246 registered members tma sa members directory business rescue. I wish to assess the development of business rescue in south africa. South african companies who are trading in insolvent circumstances now have the opportunity to reorganise and restructure. More about the online course the course will give you the necessary skills to act as a business rescue practitioner and fulfil your duties in accordance with the letter and spirit. There are similarities in law between south africa and the uk. South african business rescue procedure lexisnexis sa.