The Companies Act 2008 introduced the concept of Business Rescue to the South African business environment with its promulgation on 01 May 2011.
The intention of the legislators was to provide a mechanism which would allow companies in financial distress to trade into a long term solvent position under the protection of Business Rescue.
This legislation is in line with similar Acts in Europe and America, which have been used to great success in these jurisdictions.
MD has recognised the powerful protection afforded, which, when applied correctly, should be to the great advantage of a distressed company’s employees, creditors and other stakeholders.
As MD has for many years provided valued business consulting and implemented numerous turn-around strategies, we realised that the firm had the core competencies to add true value in this process.
Subsequently, Dave Rich has been appointed as one of the First Business Rescue Practitioner’s in the Western Cape and is able to assist financially distressed businesses with the above.
The role of the Business Rescue Practitioner (BRP) is to take-over the management of the affairs of a distressed company. This involves implementing strategic initiatives to improve and maximise financial profitability and sustainability and add value for all stakeholders involved, whilst averting personal and criminal liability problems for the Directors and stave off liquidation proceedings.
The BRP would become involved, (non-exhaustively), in the following aspects of the company’s activities and management:
- Management of the affairs of the company (effectively taking on the role of the Managing Director for the duration of the process);
- Financial review;
- Cash flow forecasting;
- Negotiation with creditors;
- Agreement reviews e.g. leases;
- Assisting in effective business structuring;
- Communications with regulatory authorities to negotiate settlement figures;
- Monthly accounting;
- Advising clients trading under insolvent conditions regarding their liabilities and sales strategies.
The duties and responsibilities of the BRP are both onerous and subject to regular reporting to the stakeholders. It is our opinion that Business Rescue provides a far more appealing end result for all stakeholders than the only alternative being liquidation with the high personal liability implications attached to Directors.
It must however be noted that Business Rescue should not be viewed as a final resort, but rather as a strategy to ensure that an Enterprise flourishes.
By entering Business Rescue at too late a date, the possibility of a successful outcome is very limited.
At MD, we passionately believe that under the right circumstances we can make a huge difference to distressed companies through our appointment as Business Rescue Practitioner.
To explore further, please contact Dave Rich.
Dave has received his conditional license as Business Rescue Practitioner.
To view this license, please click here.
Business Rescue Testimonial
Brian Isham: Member of Bermar Hydraulics CC
16 October 2013
“Business Rescue”, when Dave Rich of MD Accountants first said those words to me my stomach sank and I felt the start of a serious reflux attack. I had left things a little late, believing that I could save this thing myself and was, as usual, wrong.
There are, to our mind, two aspects to Business Rescue. The business aspect and the personal aspect. Having lost money a few times when customers of ours had liquidated we didn’t want to be the ones that did this to someone else and it took a while for us to be convinced that we were acting in the best interests of our suppliers by going into Business Rescue. Dave and his team talked us through the process in a way that we came to realise that this was not only the best option for our suppliers, but for ourselves and our staff as well. That’s the personal aspect, coming to terms with your own failure and being able to admit it. If you can do that, the rest is easy.
The business aspect is MD Accountants’ baby and they showed true parental caring and compassion combined with a fairness to all attitude. To reduce expenses they roped us in for the donkey work and guided us every step of the way, having us report daily on virtually everything. It was hard work, but it made us feel part of the whole process and gave us a deep understanding of it.
Today, four months later, we are operating from a positive cash base and business hasn’t been this good in years. The stress and worries are for the most part gone and we can concentrate on making money again. Our relationship with our suppliers is good and most of them have proved to be surprisingly supportive. We come out of Business Rescue in a weeks’ time and get to stand on our own two feet again, a fresh start, with knowledge that will prevent us from making the same mistakes again.
MD Accountants were professional, always on hand with support and treated us as people not just another client.
Dave has my permission to reveal my companies and my name and telephone number to anyone who is truly in need of this sort of help. I am happy to tell you that the light at the end of the tunnel is the torch that MD Accountants is holding out to you.
Thank you MD Accountants Team.