Business Rescue (Rescue) is a relatively new process in the South African legal landscape. It forms a part of the Companies Act and is known as “Chapter 6”. It has now been a part of our legal landscape for just over 6 years. The process has assisted many businesses to become profitable once again.
The process of Rescue is, in essence, a business turnaround bolstered by the protection offered by the Companies Act. This is done to ensure that the struggling company is not attacked by its creditors while attempting to recover.
The directors must carefully consider the decision to place a company under Rescue. The process is an intense one and might not always be the best for a company. The first and most important step is to measure the financial distress of the company. If the company can prove that it is not experiencing financial distress, then this process might not work. Should the company need assistance, but not necessarily a rescue process, then a business turnaround might work well.
Once the directors have determined that this process is the right one to opt for, then they must identify a rescue practitioner. This step is probably the most critical of all. The rescue practitioner must have the best intentions for the company’s survival at heart. A Rescue process might be the right course of action to get your business back to profitability.