Waiting until every creditor is demanding payment and every source of cash has disappeared can make recovery much harder. Business rescue provides a formal mechanism for dealing with serious financial distress before the situation necessarily reaches liquidation.
Source: Companies Act 71 of 2008
Frequently Asked Questions
What does "financially distressed" mean?
The Companies Act provides a specific legal meaning involving the company's ability to pay debts as they become due and its prospects of becoming insolvent.
Does entering business rescue mean the company is bankrupt?
No — business rescue is a legal process for dealing with financial distress and attempting rehabilitation.
Who runs the company during business rescue?
A business rescue practitioner is appointed to oversee the rescue process and exercise the powers provided by the Companies Act.