In accordance with Section 131 of the Companies Act 71 of 2008, a Company can be placed in business rescue, if any of the following requirements are present:

1. If the company is financially distressed;
2. the company has failed to pay over any amount in terms of an obligation under or in terms of a public regulation, or contract, with respect to employment-related matters; or
3. it is otherwise just and equitable to do so for financial reasons.

It is however a prerequisite, that in each requirement, there must be a reasonable prospect for rescuing the company.

This brings the question to mind, who may place a company in business rescue? Any affected person for instance, a creditor, a shareholder, a registered trade union, representing employees of the company, or an employee, may apply to any High Court in the Republic, to place a company in business rescue.  This may happen at any time (given that a company has not yet adopted a resolution to begin business rescue proceedings), which must include a notice to each affected party in the prescribed manner. This application to place a company in business rescue is done in terms of Section 131 of the Companies Act.

If you need specialist advice on this topic, SD Nel Attorneys can assist with Business Rescue Proceedings and appoint one of our Business Rescue Practitioners to assist with this process.