All businesses that are financially distressed and want to takea decision to start rescue proceedings can file notices prescribed in the Act.
Chapter 6 of the Companies Act 2008 (Act 71 of 2008) provides for the efficient rescue and recovery of financially distressed companies, in a manner that balances the rights and interests of all relevant stakeholders.
Principles relating to corporate rescues are introduced which brings South Africa in line with international principles of turnarounds and corporate rescue as they exist in foreign jurisdictions.
The regime of judicial administration of failing companies is overhauled with a modern business rescue regime that is:
- largely self-administered by the company,
- under independent supervision (practitioner)
- subject to court intervention
The Act recognises the interests of stakeholders in general (shareholders, creditors and employees) and provides for their respective participation in the development and approval of a business rescue plan.
It is envisaged that the function will stretch further than the administration and filing of Notices to start and end business rescue processes and will also involve the establishing of business rescue as a profession through the establishing of an accreditation model for business rescue practitioners.
The success of business rescue will be closely monitored to ensure that South Africa sets an example not only nationally, but also internationally.
More to follow!