How does a company go under Business Rescue?

Any company or close corporation can be placed under business rescue when the management of such an entity resolves to undergo these proceedings and lodges an appropriate application with the Companies and Intellectual Property Commission.  This application is prohibited if liquidation proceedings are pending against the Company or Close Corporation, but can business rescue in these circumstances still commence if the High Court grants an order to that effect.

This process takes no more than two days from the passing of a resolution by the management of the business to commence with business rescue proceedings. It is therefore a cost effective an simple manner in which the company is placed under supervision and remains protected from any legal steps taken and/or contemplated by creditors or other affected parties against the business.

Section 129(7) actually places an obligation on the management of a business to resolve to undergo business rescue proceedings if the management foresee that the business will not be able to meet its obligations towards creditors in the ensuing six months.  

It is therefore imperative that management of Companies and Close Corporation act proactive in the above mentioned circumstances to remain compliant with the Companies Act.