Business rescue is a process aimed at facilitating a consensual rehabilitation plan for a company facing financial stress or insolvency. The registered Business Rescue practitioner provides a temporary moratorium on the rights of creditors whilst at the same time managing the financial affairs of the company. The process needs to be of benefit to creditors so as to allow the company to continue to trade and repay the debts incurred. With reference to chapter 6 of the Companies Act, this is referred to as a chapter 6 application.
Any company that foresees that it will not be able to meet its credit agreements over the next six-month period, or foresees that it will be faced with insolvency within the same period, can appoint a business-rescue practitioner. The affected parties also play an important part in the business-rescue process and can include, creditors, shareholders and employees.
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