What is Business rescue?
A Companies Act process that places a financially distressed company under a business rescue practitioner to try to save it or get a better result than liquidation.
Chapter 6 of the Companies Act lets a financially distressed company, one unlikely to pay its debts or likely to become insolvent within the next six months, start business rescue by board resolution or court order. The company files a notice with CIPC (Form CoR 123.1) and appoints a licensed practitioner.
During business rescue, creditors generally cannot take legal action against the company while the practitioner prepares a rescue plan for creditors to vote on. Directors must act quickly: if the company is distressed and they don't start business rescue, they must tell shareholders and creditors why.