Business rescue is a legal process aimed at rehabilitating a financially distressed company
by providing temporary supervision and management by a business rescue practitioner, a
moratorium on claims against the company, and the development and implementation of
a business rescue plan.
A company can enter business rescue voluntarily by passing a resolution by its board of
directors or involuntarily through a court order on the application of an affected person,
such as a creditor or shareholder.
A business rescue practitioner is a licensed professional appointed to oversee the business
rescue process, develop a business rescue plan, and manage the company's affairs during the process.
A business rescue plan is a detailed proposal outlining how the company will be restructured to
rescue it from financial distress, including measures to maximize the likelihood of the company
continuing in existence on a solvent basis or achieving a better return for creditors.
During business rescue proceedings, the business rescue practitioner takes control of the company,
develops a business rescue plan, and implements it if approved by creditors and shareholders. The
company is protected from legal claims and enforcement actions during this period.
Creditors have the right to be informed about the business rescue process, participate in meetings,
vote on the business rescue plan, and receive a distribution of assets if the company is liquidated.
Business rescue proceedings typically last for a period of three months, but this can be extended
by the court or by the business rescue practitioner with the creditors' consent if necessary.
Yes, a company can continue to trade during business rescue, but it must do so under the
supervision of the business rescue practitioner and in accordance with the business rescue plan.
If the business rescue plan is not approved, the company may be placed into liquidation, and its
assets will be sold to pay off creditors.
The potential outcomes of business rescue include the successful restructuring and continuation of
the company, the sale of the company or its assets, or the liquidation of the company if the rescue
plan is not viable.
