By now we are all aware that SAA is headed for business rescue. This is what you need to know about the process. The Companies Act, 2008, provides a measure of relief for "financially distressed"
companies by placing a moratorium on their obligations and appointing a
licensed business rescue practitioner to guide the company out of its
difficulties.
A company is "financially distressed" if it 'appears to be reasonably
unlikely that the company will be able to pay all of its debts as they
become due and payable within the immediately ensuing six months or it
appears to be reasonably likely that the company will become insolvent
within the immediately ensuing six months. A company becomes insolvent
when its liabilities exceed its assets.
Business rescue proceedings begin when the company files a resolution or an
affected person applies to court for an order placing the company under
supervision or the court makes an order to do so.
business rescue proceedings are envisioned to be completed within 3 months, if it takes longer than this, the
practitioner is required to make a progress report to each affected person,
the court or the Commission. The effect of going into "business rescue" is that no legal proceedings can
be commenced or proceeded with (unless agreed by the business rescue
practitioner or the court), and the practitioner has the power to suspend
any contract to which the company is party. The Act also sets out the right of employees during rescue proceedings. Any unpaid remuneration or employment related monies due to employees which became due and payable prior to the rescue proceedings rank as preferred unsecured creditors. Any medical or pension and provident scheme will rank as an unsecured creditor for amounts due and payable before commencement of proceedings. Employees of the company immediately prior to the commencement of business
rescue proceedings continue to be employed on the same terms and conditions unless they agree to different terms and conditions in accordance with applicable labour laws.
Do you think business rescue is the answer to SAA's woes?
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