Book on ‘hot topic’ Business Rescue set to launch
18 Oct 2017
In our current economic climate with various private and public companies, as well as State Owned Entities (SOEs) being placed under severe financial pressure, the need to understand the business rescue procedure (as set out in Chapter 6 of the 2008 Companies Act) has become critical. In these tough economic times, directors who sit on boards of companies that are financially distressed might have no alternative, but to consider applying for business rescue.
The benefit of business rescue is that it provides an alternative to the liquidation of the struggling entity and provides an option to effect a business turnaround, and implement a strategic plan to restructure the failing business. Examining this concept in detail is a new loose leaf published by LexisNexis South Africa, South African Business Rescue Procedure by Dr Eric Levenstein, which will be launched at Werksmans Attorneys on 18 October 2017.
In South African Business Rescue Procedure Dr Levenstein explains the law applicable to the business rescue procedure and examines the practical challenges of implementation in South Africa, particularly the development of legal precedent and interpretation of the provisions of Chapter 6 of the 2008 Companies Act. This reference work will be useful for attorneys, advocates, judges, business rescue practitioners, trade unions and post graduate students.
The publication is also essential for directors of companies who might, at some point in the future, be exposed to a rapidly deteriorating state of financial affairs in a company and who will need to understand and unpack the obligations imposed on directors when deciding whether or not to place the company into a business rescue process, as opposed to carrying on the trade of such company regardless.
“Since the financial crisis of 2008, the need to restructure companies in financial distress has increased. Directors of failing companies need to be acutely aware that if they continue to trade their companies in insolvent/financially distressed circumstances, they will open themselves up to personal liability claims from unhappy creditors who will be looking for someone to blame for financial loss,” said Dr Levenstein. “Early intervention is key, and delaying the inevitable can be a disastrous outcome for dilatory directors.”
An advocate for business rescue, Dr Levenstein said, “When directors of companies reach the required level of understanding of how business rescue works and where they recognise the potential upside of the process, we are going to see more and more directors of companies embrace business rescue as an alternative option, rather than just allowing their companies to end up in liquidation. It is a positive process in the sense that a successful business rescue delivers a restructured and viable company back into the South African economy and where jobs are retained in the process.”
South African Business Rescue Procedure also revisits the reasons for the failure of judicial management in South Africa and the development of South African insolvency law and its impact on, and the need for reform in, business rescue practice prior to the final incorporation of Chapter 6 into the 2008 Companies Act. The development of rescue regimes applicable in foreign jurisdictions set the tone for development of business rescue practice in South Africa. By the South African government adopting many of the international core rescue principles applicable in foreign jurisdictions, South Africa has created a modern business rescue regime which mirrors similar systems abroad and which is aimed at saving financially distressed companies, preserving employment and restructuring the discharge of debt.
South African Business Rescue Procedure stimulates continued thought and interaction amongst all stakeholders involved in business rescue and restructuring processes. This includes lawyers, law students, business rescue practitioners, creditors, financial institutions and economists who are interested in the impact that failed rescue and liquidations will have to the economy as a whole.
South African Business Rescue Procedure will be available to purchase in looseleaf 170SABUSRESYS and mobile MOBBRPISA2017 at the LexisNexis online bookstore.
About the Author
Dr Eric Levenstein is Director and Head of the Werksmans Insolvency, Business Rescue & Restructuring Practice Group in Johannesburg and author of “South African Business Rescue Procedure” (Lexis Nexis) – published in October 2017. He holds a BCom (University of KwaZulu Natal); LLB (University of the Witwatersrand); Higher Diploma in Company Law (University of the Witwatersrand); Higher Diploma in Tax (University of the Witwatersrand); Diploma in Insolvency Law (University of Johannesburg) and LLD – Doctorate of Laws (University of Pretoria).(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)