Business Rescue Flashcards
What is ‘financially distressed’ ito section 128(1)(f)?
- It appears reasonably unlikely that the company will be able to pay all of its debt as they become due and payable within the immediately ensuing 6 months
- It appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months
What must the board do if it has reason to believe that the company is financially distressed?
- Commence business rescue proceedings
- Explain to share shareholders and employees why the company is not commencing rescue proceedings according to section 129(7).
Which provision deals with business rescue?
Section 128.
What is business rescue ito section 128(1)(b)?
Proceedings to facilitate the rehabilitation of a company that is financially distressed by providing for:
1. Temporary supervision of the company, and of the management of its affairs, business and property
2. Temporary moratorium on the rights of claimants against the company or in respect of property in its possession
3. Development and implementation, if approved, of a business rescue plan that will maximise the likelihood of the company continuing in existence ona solvent basis or results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company
What is an affected person ito section 128(1)(a)?
- Shareholder/creditor
- Registered trade union representing employees
- Employees
What are the two ways in which business rescue proceedings can be commenced?
- Through a resolution by the board ito section 129
- Court order ito section 131
What is the process of business rescue ito section 129?
- Resolution
- Filing with the commission
- Notification to all affected parties
- Appointment of a BR practitioner
When may a resolution be adopted?
Ito section 129(1), when the board has reasonable grounds to believe that the company is financially distress and there appears to be a reasonable prospect of rescuing the company.
When may a resolution not be adopted?
Ito section 129(2)(a), if liquidation proceedings have been initiated by or against the company.
When must affected parties be notified?
Ito section 129(3)(a), within five business days after a company has adopted and filed a resolution.
When must a BRP be appointed?
Ito section 129(3)(b), within five business days after a company has adopted and filed a resolution. BRP must meet the requirements in section 138 and accept appointment in writing.
When will the resolution be effective?
Ito section 129(2)(b), once it has been filed.
What must the notice ito section 129(3) contain?
- Notify every affected person of the resolution
- Date on which resolution became effective
- Grounds on which resolution was taken (sworn statement).
After a BRP has been appointed what must happen?
Ito section 129(4), company must file a notice of appointment of a practitioner within 2 business days after making the appointment and publish a copy of the notice of the appointment to each affected person within five business days after the notice was filed.
What happens if the company does not comply with the procedures?
Ito section 129(5):
1. resolution lapses and becomes null
2. No further resolution can be adopted irt to business rescue for a period of 3 months after the date on which the lapsed resolution was adopted, unless a court, on good cause shown on an ex parte application, approves the company filing a further resolution,
Who can apply for an order setting aside business rescue proceedings?
Affected persons.
What are the grounds for setting aside business rescue proceedings?
- There is no reasonable basis to believe that the company is financially distressed
- There is no reasonable prospect that the company will be rescued
- The company failed to comply with section 129.
What are the requirements of a BRP ito section 138?
- Member of good standing of a legal, accounting or business management profession accredited by the Commission
- Licensed as such by COmmission
- Not subject to a probation order
- Not disqualified from acting as a director
- No relationships that would lead a reasonable and informed 3rd party to conclude that the integrity, impartiality or objectivity of that person is compromised by that relationship
- Not related to a person who has such relationships.
What is section 133?
General moratorium on legal proceedings against company.
What is section 147?
First meeting of creditors
What is section 148?
First meeting of employees’ representatives
What is section 150?
Proposal of business rescue plan.
What is section 149?
Functions, duties and membership of committees of affected persons.
