Chapter 6: Business Rescue and Compromise With Creditors
Part A: Business rescue proceedings
s129: Company resolution to begin business rescue proceedings
- (1) Subject to subsection (2)(a), the board of a company may resolve that the company voluntarily begin business rescue proceedings and place the company under supervision, if the board has reasonable grounds to believe that:
- (a) the company is financially distressed; and
- (b) there appears to be a reasonable prospect of rescuing the company.
- (2) A resolution contemplated in subsection (1):
- (a) may not be adopted if liquidation proceedings have been initiated by or against the company; and
- (b) has no force or effect until it has been filed.
- (3) Within five business days after a company has adopted and filed a resolution, as contemplated in subsection (1), or such longer time as the Commission, on application by the company, may allow, the company must:
- (a) publish a notice of the resolution, and its effective date, in the prescribed manner to every affected person, including with the notice a sworn statement of the facts relevant to the grounds on which the board resolution was founded; and
- (b) appoint a business rescue practitioner who satisfies the requirements of section 138, and who has consented in writing to accept the appointment.
- (4) After appointing a practitioner as required by subsection (3)(b), a company must:
- (a) file a notice of the appointment of a practitioner within two business days after making the appointment; and
- (b) publish a copy of the notice of appointment to each affected person within five business days after the notice was filed.
- (5) If a company fails to comply with any provision of subsection (3) or (4):
- (a) its resolution to begin business rescue proceedings and place the company under supervision lapses and is a nullity; and
- (b) the company may not file a further resolution contemplated in subsection (1) for a period of three months after the date on which the lapsed resolution was adopted, unless a court, on good cause shown on an ex parte application, approves the company filing a further resolution.
- (6) A company that has adopted a resolution contemplated in this section may not adopt a resolution to begin liquidation proceedings, unless the resolution has lapsed in terms of subsection (5), or until the business rescue proceedings have ended as determined in accordance with section 132(2).
- (7) If the board of a company has reasonable grounds to believe that the company is financially distressed, but the board has not adopted a resolution contemplated in this section, the board must deliver a written notice to each affected person, setting out the criteria referred to in section 128(1)(f) that are applicable to the company, and its reasons for not adopting a resolution contemplated in this section.
Related Sections
s128: Application and definitions applicable to Chapter
s132: Duration of business rescue proceedings
s138: Qualifications of practitioners
Related Regulations
R123: Notices to be issued by a company concerning its business rescue proceedings
Related Notes
No related note.
Related Forms
CoR123.1: Notice of start of Business Rescue Proceedings
CoR123.2: Notice of appointment of Practitioner
CoR123.3: Notice to not commence business rescue proceedings