Page 51 - Q&A

How can a business rescue plan help my
business in tough times?

July 2020
“My business has been struggling since the start of the Covid-19 pandemic and
the national lockdown. I’ve been advised to consider business rescue but I am
unsure about how I will get a business plan in place and what this will entail.
Can you give some guidance here?”

Business rescue can be a viable option for a company that has fallen on tough Commercial
times but has the potential to right itself again. This is where business rescue can
assist a business and provide the necessary time and support for it to recover.
Sections 150 to 154 of the Companies Act 71 of 2008 deals with the development
and approval of a business rescue plan by a business rescue practitioner
appointed by the company, and is fundamental to the business rescue
proceedings. To explain the business rescue process, I will break down each of
these important sections:

Section 150 sets out the framework for a business rescue plan, and what it must
include, namely:
• a background on the company, operations and current financial position;
• proposals highlighting how the business rescue practitioner intends to
‘rescue’ the company;
• assumptions and conditions that the business practitioner makes in
respect of the company.
This business rescue plan must be published by the company within 25 business
days after the date on which the business rescue practitioner was appointed,
or such longer time as may be allowed by the court or the holders of a majority
of the creditors’ voting interests. Within 10 business days after publication the
business rescue practitioner must convene a meeting of the creditors and other
relevant stakeholders to consider the published business rescue plan and either
accept or reject it.
The published business rescue plan will be approved on a preliminary basis if
it is supported by the holders of more than 75% of the creditors’ voting interest
that voted and if such votes in support of the proposed business rescue plan
also includes at least 50% of the voting interests of any independent creditors
that voted.

In the event that the published business rescue plan is adopted such business
rescue plan will be binding on the company, every holder with a voting interest,
and each creditor of the company, irrespective of whether or not such persons

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