Business Rescue and what it means:

Business Rescue was introduced with the introduction of the Companies Act 71 of 2008. Its purpose was, as it is titled, to rescue businesses in financial distress and to turn them around.

Unfortunately, business rescue is perceived by many to be a failure as so often, the business rescue turns into a liquidation.

There is no doubt that business rescue has a role to play in the economy as long as it is seen as asolution as soon as the company is seen to be in financial distress. The directors of a company are obligated to to take the following action if a company is seen to be in financial distress: - 

• Liquidation, or
• Business rescue

Failure to take such action on the part of the directors can be seen as negligence on the part of the directors.

The lockdown arising from the Corona Virus pandemic will no doubt place many businesses in financial distress due to the inactivity of the business for lengthy periods. While income has dried up due to no trading, the overheads will not have dried up.

It is the responsibility of the board of directors to act swiftly. An educated assessment must be made as to whether the business can be saved or not. If it can be save, the board must immediately arrange for the company to be placed in business rescue. Procrastination is the thief of time and delays could cost the company dearly.

For expert advise on this solution contact us at Holboth. We have considerable experience in this and are licenced as senior business rescue practitioners