Appointment of the business rescue practitioner can occur in two ways:
- appointment by the board of directors of a company that filed for voluntary business rescue, or;
- by way of a court order where an affected person applied to the court for a company to be placed under Business Rescue.
The business rescue practitioner is granted the following powers:
- The business rescue practitioner takes full control of the management of the company and stands in the shoes of the business’s pre-existing management.
- The business rescue practitioner is entitled to delegate any of his functions and powers to any person who forms part of the pre-existing management.
- In turn, the business rescue practitioner is also given the authority to remove any person from his position who formed part of the pre-existing management.
- The business rescue practitioner may also, within the limited authority, appoint any person to form part of the management of a company.
Being a business rescue practitioner comes with a lot of responsibility, including, but not limited to:
- development of the business rescue plan to be approved by the affected persons;
- implementation of such business rescue plan;
- inform all relevant regulatory authorities of the business rescue and an appointment;
- the business rescue practitioner is an officer of the court for the duration of the business rescue process, and as such is obligated to act in accordance with the court rules and or orders.
- fulfill all the responsibilities, and duties and accept such liabilities that rests on the shoulders of a director of a company as set out in section 75-77 of the Companies Act. Failure by the business rescue practitioner to act in accordance with these duties and or responsibilities may lead to his/her removal.
One duty of the business rescue practitioner that requires more attention in the preparation and implementation of the business rescue plan. In short, the plan must set out the manner in which the business rescue practitioner intends to rescue the company.
During the planning process, the business rescue practitioner must consult with all stakeholders. The plan must be published within 25 days post appointment of the business rescue practitioner, and once adopted, the plan will be binding on the company and stakeholders.
Business rescue proceedings will terminate when:
- the court sets aside the resolution or court order that began the Business Rescue proceedings or when the court converts Business Rescue proceedings into liquidation proceedings;
- the business rescue practitioner files a notice of termination of the Business Rescue proceedings with the CIPC;
- a plan has been proposed and rejected and no affected person has acted to extend the proceedings in any manner contemplated by the Act; or
- a plan has been adopted and the business rescue practitioner has subsequently filed a notice of substantial implementation of the plan with the CIPC.
To place a company under business rescue will never be an easy route to follow but can under the right circumstances, just be the correct medicine a company requires to get back on its feet again.