The Restructuring and Rehabilitation of companies in financial distress is on the increase globally. In line with this trend, Chapter 6 of the new Companies Act, No. 71 of 2008, (the Act) introduced "Business Rescue” to the South African business landscape. This part of the act allows financially distressed businesses to file for Business Rescue and with the assistance of a business rescue practitioner bring the business back to a more stable and profitable entity.
South African companies that are financially distressed or that trade in insolvent circumstances now have a fighting chance to rescue their companies without having the stress of creditors knocking on the door insisting on payments as this part of the act offers a moratorium on legal proceedings against any company that is in business rescue. This new part of our company legislation also prevents creditors from commencing liquidation procedures against the business and prevents any of its assets being taken by any party.
This gives the company the opportunity it needs to reorganise and restructure its affairs and to structure a payment scheme with its creditors. Furthermore, the business continues to trade as normal, all the while saving much needed jobs and allowing the business to continue trading as an economically contributing entity.
THE PURPOSE OF THE BUSINESS RESCUE PROCEDURE
Business Rescue aims to do exactly what the name says, to rescue or rehabilitate a company which is under financial distress. A "Business Rescue Plan” must be drawn up by a provisionally licensed business rescue practitioner that possesses the necessary industry knowledge, who has the capacity to take on the specific business rescue and where there are no conflicts of interest with the business. This "Business Rescue Plan” will then be put to a vote by the creditors and once successfully voted in, the business rescue practitioner must implement and oversee the business rescue plan in an attempt to save the company.
Corporate Project Management Services or "CPM Services” is a Port Elizabeth based Business Rescue company that does not just operate in the Eastern Cape, but has also performed projects in East London, George, Bloemfontein, Kirkwood and Cape Town. CPM Services’ main focus is assisting financially distressed businesses both formally and informally. This means that we assist businesses to return to profitability by utilising the Business Rescue procedures in the Act and informally by assisting company turnarounds outside of the Act.
CPM Services is based in Walmer Port Elizabeth and assists all medium to large businesses within South Africa.