Business rescue, can it work?
Business Rescue is a relatively new concept, having only been law since 1 May 2011 and is govern by the Companies Act 71 of 2018. But does it work?
Given the right set of circumstances, it does work.
Business rescue provides a “breather” for financially distressed companies. It functions as a temporary moratorium on the rights of creditors against the company, and the suspension of contractual obligations of the company. This allows the appointed business rescue practitioner to either restructure the affairs of the company (assets, liabilities and equity) that maximises the likelihood of the company being able to trade back to solvency, or to realise the assets of the company to secure a better return to its creditors and shareholders, than in the case of a liquidation... Read More
“Schemes of business” and the abuse of the Insolvency Act to stop legitimate sales in execution from proceeding
A property owner and mortgagor encounters financial difficulties and defaults on his monthly bond payments. The bank forecloses on the bond, the mortgagor (now a “debtor”) becomes overwhelmed and ignores the legal process instituted against him while he tries his best to overcome his financial woes.
After a few months, having received no further notices and under the impression that the bank has “given up”, the debtor receives a visit from the sheriff informing him that his house will be sold in execution... Read More