August 2016


APPOINTING THE BEST BRP Business Rescue Feature August 2016

The fiduciary duties of the BRP (business rescue practitioner) are defined by legislation and by the many roles the BRP plays in the business rescue proceedings. These duties include acting with the utmost trust, loyalty, good faith and confidence, to the benefit of all stakeholders in the business rescue process. It is accepted that the BRP is held to a standard of conduct and trust higher than that expected from the casual business person.

Read More

PAYING THE BRP Business Rescue Feature August 2016

A company falls on hard times; it ticks all the boxes of being financially distressed as contemplated in s128(1)(f) of the Companies Act (71 of 2008). Faced with this reality, the directors of the company pass a resolution in terms of s129 of the Act placing the company under supervision, and appoint a business rescue practitioner (BRP) who consents in writing to accept the appointment. The company is now in business rescue.

Read More

RESCUE FROM THE RESCUER Business Rescue Feature August 2016

Since the inception of business rescue, misconduct by business rescue practitioners (BRPs) has been one of the biggest causes of complaint (and headaches) by creditors. More and more disgruntled creditors and other affected persons are pursuing the removal of rogue BRPs of companies in business rescue.

Read More

INTELLECTUAL PROPERTY AND BUSINESS RESCUE Business Rescue Feature August 2016

What questions relating to Intellectual Property (IP) are to be asked when a company goes into business rescue? IP can fulfil different levels of importance to a company depending on whether it is operating in an IP intensive environment or a less intensive environment. In this article a few aspects relating to IP and business rescue will be considered.

Read More

STATUTORY RANKING Business Rescue Feature August 2016

Whilst much has recently been said – and a little written – on the topic of post-commencement finance in business rescue, lenders and practitioners continue to question its precise statutory ranking. The drafting of Chapter 6 of the Companies Act (71 of 2008), and in particular s135, which sets out the order of preference for the settlement of claims against a company undergoing business rescue proceedings, is unclear in a number of respects. Although Kgomo J of the High Court, South Gauteng Local Division (Johannesburg) has handed down two judgements mentioning the statutory order of preference for the settlement of claims against a company in business rescue, the judgements raise a number of questions, and should, in our view, be considered with a measure of caution.

Read More

THE ELEPHANT IN THE ROOM Business Rescue Feature August 2016

There can be little doubt that even the best thought out, most meticulous and well-structured business rescue plan cannot succeed unless there is some degree of financial support in the form of Post-Commencement Finance (PCF) to allow the business to sail through the choppy waters of financial distress.

Read More

A PRAGMATIC APPROACH Business Rescue Feature August 2016

An applicant (the creditor) serves an application for the winding-up of a respondent (the company). The application is firstly based on the fact that the company is both factually and commercially insolvent and, secondly, that it is just and equitable to do so. The merits are uncontentious.

Read More

INTERPRETING “ENFORCEMENT ACTION” Business Rescue Feature August 2016

In discussions about the reasoning behind the business rescue process, the phrase "breathing space" is often used. These simple words are a neat metaphor for what the business rescue process tries to achieve.

Read More

THE IMPORTANCE OF JOINING CREDITORS Business Rescue Feature August 2016

In the recent case of Golden Dividend v Absa Bank (569/2015) [2016] ZASCA 78 (30 May 2016) the Supreme Court of Appeal (the SCA) confirmed that creditors have a direct and substantial interest in proceedings to set aside business rescue. The non-joinder of creditors is, therefore, fatal to the relief sought in such an application.

Read More

THE LAZY BIRD CAN STILL CATCH THE WORM Business Rescue Feature August 2016

Section 133 of the Companies Act (71 of 2008) places a general moratorium on legal proceedings while a company is under business rescue. This provides it with time and resources to be rehabilitated through the implementation of a business rescue plan. As a result, there is some debate as to whether creditors are precluded from perfecting their security, such as a notarial bond, under business rescue.

Read More

LEGAL PROCEEDINGS UNDER BUSINESS RESCUE Business Rescue Feature August 2016

Due to the unfavourable economic climate in which we find ourselves, it is unfortunate that legal entities and individuals in their personal capacities have to deal with companies under business rescue and, more particularly, business rescue practitioners.

On the face of it, the rights of creditors appear to be far less than those of the company placed under business rescue. However, the Companies Act (71 of 2008) does create a balance of rights.

Read More