By Administrator|June 16th, 2019|Business Rescue|Comments Off on Business Rescue not always the best solution
What is business rescue?
Business rescue is a process adopted in the Companies Act that can place a business under rescue for a period of up to six months, where the business does not have to pay any debts and payment arrangements are made with creditors. A business cannot be under business rescue for longer than 6 months, whereafter it must either go into liquidation or it must have recovered from the difficult financial period. A business rescue practitioner is appointed to facilitate the process.
Who is the business rescue practitioner
This is the person that is appointed to lead the business through the business rescue process. It is a person who did a business rescue practitioners course and who is registered as such.
What is wrong with the business rescue process?
Quite a few things are wrong with the business rescue process in my opinion. It is quite an expensive process. The one person smiling to the bank is the business rescue practitioner because he/she gets paid no matter whether your business fails or recovers. Usually, if a business needs to go into business rescue, it is too late, and the problem cannot be rectified which leaves the company to liquidate. There are other issues in our opinion with the business rescue process which will not be discussed here. It is sufficient to point out to the main problems we have with the business rescue process is that nearly all of them end up in liquidation. So why spend so much money and time when we have the solution for a quicker process with a better result.
How do I know that business rescue will work for my business?
The purpose of the business rescue process is to help a business that is going through a tough time by giving the business temporary protection against its creditors whilst the business continues to trade. The problem should only be temporary. The business rescue process is not designed to fix a business that is broken unless there is enough work on the table to ensure that the company will trade out of the existing problem. So many businesses should not go under business rescue in the first place as they will never trade out of the problem. Trading out of a problem is in my opinion also not a good idea, as it is too stressful, too expensive, takes too long, places too much burden on an already suffering business and again, liquidation can reach a better and faster result.
What is the alternative to business rescue?
Usually, the alternative is to liquidate. It is cheaper, solves the problem faster and saves you a heck of a lot of money as there are no monthly payments to make to a person. We can assist you with continuing to trade while we liquidate your business. It is possible to buy assets back from the insolvent estate, re-negotiate leases with your landlord and do many legitimate things to keep your business going while you get rid of the problem it may experience.
We specialise in just that: to assist you with keeping you on your feet while we assist you to get rid of a problem business. Contact us for further enquiries.