Business Rescue (BR) is an exciting new addition to the tools available to company directors in escaping from their mistakes, keeping their jobs, and perhaps some of their employees’ jobs too.
It’s a wonderful idea.
Except a lot of other small business owners are going to get screwed by people using the provisions in the new Companies Act. It’s that simple. Close on 1,000 businesses will by now have been “placed in BR”. A few dozen have been rescued. The balance have either been liquidated, or are languishing in BR, waiting for someone to complain.
The biggest problem is that too few attorneys and other professionals have been exposed to the provisions to know when they are being had.
There are many restrictions governing exactly how the BR practitioners can behave. I bet few of them accurately understand the provisions properly, and many of them are going to be paying for their lack of knowledge by digging into their own nest eggs.
If a BR practitioner acts outside the provisions of the Act, he may be held personally liable by creditors. Ask me how. I have been involved in a number of these things in the last eighteen months or so.
It is only a matter of time before a BR Practitioner is taken to task by a creditor, for not following the law closely. It is also only a matter of time before a business rescue is declared a nullity, also because the rules were not followed properly.
If you intend to take your own business into BR in the near future, you should plan for it properly.