There is a big shortage of business rescue practitioners in South Africa

It is predicted that the deluge of failing businesses caused by the COVID-19 shut down is going to overwhelm the number of available Business Rescue Practitioners currently registered to practice.

Sagacity Corporate Services has partnered with G&A Compass, the definitive authority on business rescue proceedings in South Africa, to offer prospective practitioners a chance to become part of the most compliant group of professionals operating in this space. 

Business Rescue vs Liquidation

Liquidation

 Liquidation legislation dates from the 1930’s (Insolvency Act 24 of 1936), and is not the best possible option for a distressed business due to the following constraints:

  • It does not provide for a fair distribution of assets, favouring the state
  • The cost structure associated with the liquidators and auctioneers is not clear.
  • There is no incentive to try and rescue the business. The focus is on the distribution of assets only.
  • Liquidation involves costly court processes and the Master of the High Court, which means the process is slow, complex and very expensive.

The way that liquidation has been implemented in South Africa, is largely to blame for the bad reputation that any action to do with the winding-down or restructuring of businesses has.

Business Rescue

Business rescue was introduced in the Companies Act, 71 of 2008. It buys a distressed company some breathing space. It gives the practitioner a chance to evaluate whether the business can be saved. If so, the law provides the mechanisms required to pull the business through.

  • It places a moratorium on existing debt and gives the practitioner a chance to evaluate the business, without pressure.
  • The fee structure for the practitioner’s work is prescribed by law.
  • It provides for the acquisition of post-commencement finance to provide the fuel required to pull the business through.
  • It provides for a structured, orderly process of creditor participation, with clear guidelines in terms of time lines and obligations of all affected parties.

Business rescue places the process in the hands of the creditors and other affected parties to direct the outcome of what happens to the business as a part of a structured negotiation process.

Join the experts and build your career as a well-respected Business Rescue Practitioner