The legal framework for business rescue

The Companies Act in South Africa provides a legal framework for business rescue, a process intended to rehabilitate financially distressed companies. To initiate business rescue, the company's directors file a notice of business rescue, including a statement of the company's financial position and a proposed business rescue plan, with the Companies and Intellectual Property Commission (CIPC). A business rescue practitioner then develops a restructuring plan, with the approval of creditors and shareholders, which becomes binding upon approval. South African courts have a clear approach to analysing business rescue proceedings, as highlighted by several case studies, taking into account factors such as the company's financial distress, assets, and cash flow.