Chapter 6: Business Rescue and Compromise With Creditors
Part A: Business rescue proceedings
s131: Court order to begin business rescue proceedings
- (1) Unless a company has adopted a resolution contemplated in section 129, an affected person may apply to a court at any time for an order placing the company under supervision and commencing business rescue proceedings.
- (2) An applicant in terms of subsection (1) must:
- (a) serve a copy of the application on the company and the Commission; and
- (b) notify each affected person of the application in the prescribed manner.
- (3) Each affected person has a right to participate in the hearing of an application in terms of this section.
- (4) After considering an application in terms of subsection (1), the court may:
- (a) make an order placing the company under supervision and commencing business rescue proceedings, if the court is satisfied that;
- (i) the company is financially distressed;
- (ii) the company has failed to pay over any amount in terms of an obligation under or in terms of a public regulation, or contract, with respect to employment-related matters; or
- (iii) it is otherwise just and equitable to do so for financial reasons, and there is a reasonable prospect for rescuing the company; or
- (b) dismissing the application, together with any further necessary and appropriate order, including an order placing the company under liquidation.
- (5) If the court makes an order in terms of subsection (4)(a), the court may make a further order appointing as interim practitioner a person who satisfies the requirements of section 138, and who has been nominated by the affected person who applied in terms of subsection (1), subject to ratification by the holders of a majority of the independent creditors' voting interests at the first meeting of creditors, as contemplated in section 147.
- (6) If liquidation proceedings have already been commenced by or against the company at the time an application is made in terms of subsection (1), the application will suspend those liquidation proceedings until:
- (a) the court has adjudicated upon the application; or
- (b) the business rescue proceedings end, if the court makes the order applied for.
- (7) In addition to the powers of a court on an application contemplated in this section, a court may make an order contemplated in subsection (4), or (5) if applicable, at any time during the course of any liquidation proceedings or proceedings to enforce any security against the company.
- (8) A company that has been placed under supervision in terms of this section:
- (a) may not adopt a resolution placing itself in liquidation until the business rescue proceedings have ended as determined in accordance with section 132(2); and
- (b) must notify each affected person of the order within five business days after the date of the order.
Related Sections
s129: Company resolution to begin business rescue proceedings
s132: Duration of business rescue proceedings
s138: Qualifications of practitioners
s147: First meeting of creditors
Related Regulations
R123: Notices to be issued by a company concerning its business rescue proceedings
R124: Notices to be issued by affected persons concerning court proceedings
Related Notes
No related note.
Related Forms
No related forms.