Business rescue can be of great assistance to many companies in distress. However, it is not always the solution for businesses in distress. Business Rescue has very few safeguards and in effect entails placing a business completely under the control of a business rescue practitioner ('BRP'). The BRP has sole discretion over payments including the ability to assess his own invoices.
However, in terms of the Pension Funds Act the directors of a company may be made liable for non-payment by the Company of contributions to the pension fund. It is also a criminal offence.
There is no overarching governance over the BRP to ensure adherence to the business rescue plan or that he is not unduly delaying business rescue proceedings.
However, the solution lies in seeking an informed opinion about the procedure either before approaching a BRP and placing a business in the hands of a stranger or at the first signs that the BRP is extending the process.
Liquidation does not necessarily mean a business demise or that its assets need to be sold at auction. Businesses can and do run under liquidation and there are many viable methods of salvaging a business and saving a business from a BRP.
JUNE STACEY MARKS ATTORNEYS has considerable experience in saving a business from business rescue.
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