Insolvency & Business Rescue Law Advocates
What is Insolvency & Business Rescue Law?
“Insolvency” refers to a status of diminished legal capacity imposed by the courts on persons who are unable to pay their debts, or whose liabilities exceed their assets. This is done in the interests of protecting other persons, primarily the general body of existing creditors, but also prospective creditors. The law of insolvency envisages and accounts for the sequestration of individuals and the liquidation of companies.
There is at present no single unified Insolvency Act but rather a collection of Acts which make up the law of Insolvency of South Africa. Accordingly, the Insolvency Act, No. 24 of 1936 must be read together with the Companies Act, No. 61 of 1973, the Companies Act, No. 71 of 2008, Close Corporations Act, No. 69 of 1984, the Cross-border Insolvency Act, No. 42 of 2000 and established common law principles to provide a complete view of the law of insolvency in South Africa.
Business rescue, as defined by the Companies Act 2008, aims to facilitate the rehabilitation of a company that is "financially distressed" by providing for (a) the temporary supervision of the company and management of its affairs, business and property by a business rescue practitioner (b) a temporary moratorium on the rights of claimants against the company or in respect of property in its possession and (c) the development and implementation of a business rescue plan to rescue the company by restructuring its business, property, debt, affairs, other liabilities and equity.