Business rescue as an alternative to liquidation in South Africa
By Cornelia van Heerden, Heyns and Partners Inc
With the inception of the Companies Act 2008 (hereinafter referred to as 'the Act), South African corporate law practitioners were recently introduced to a new concept, the principle of Business Rescue.
Traditionally, local corporates in financial trouble have had very few legal options. Any mistaken step could easily be deemed an act of insolvency. The courts have provided a clear indication of what is required from practitioners, stating that business rescue proceedings only apply to an ailing corporation which, given time, has a reasonable prospect of being sustainable.
Some of the major advantages to business owners are that the Act protects businesses by providing for: temporary supervision of the company, the management of its affairs, business and property, a temporary stay on the rights of claimants against the company in respect of property in its possession, and the development and implementation of a business rescue plan to restructure its business, property, debt and other liabilities.
More practically, it entails that a company under business rescue, cannot be sued or executed against, can suspend existing contracts and that sureties or guarantees given by a company may not be enforced.
In summary, it is beyond doubt more advantageous to all parties involved that a company, in which various persons invested capital and time, and which provides employment security for many while also creating a source of income for the state in the form of tax, remains trading.
Cornelia van Heerden, Director
Heyns and Partners Inc, Goodwood, South Africa
T: +27 21 590 72 00
Cornelia van Heerden joined Heyns and Partners Inc in 1990 as an attorney and conveyance. She was appointed a director in 1993. Cornelia specialises in High Court litigation in the area of claims for damages in respect of personal injuries, damages resulting from property transactions and contracts, and family law.
Heyns and Partners Inc was founded in 1958. In 1986, the firm started to operate and conduct business under its current name. It is privileged to represent a very diverse and extensive client base, both corporate and individual, offering litigation, conveyancing and notary services.
published: September 2013