Business Rescue Law

They are many creditor financial institutions believe business rescue applications are being abused, according to a commercial lawyer on Monday and this comes as the number of applications for business rescue by companies that are financially distressed has increased for the implementation of the New Companies Act in May.

A companies committing the alleged abuse are said to be trying to prevent foreclosure of overdraft facilities or loans andthe eric Levenstein, director at Werksmans Attorneys says, that many business rescue practitioners have been appointed in companies in the resolution passed for business rescue was nothing more than an attempt to delay the ultimate demise of the company for the clearly it could not pay its debts to creditors.

Many South African financial institutions are met with resolutions for business rescue when proceeding against debtors up once business rescue proceedings begin there is no opportunity for creditors to legally pursue claims against debtors to the new business rescue procedure provides companies in financial distress with alternatives to liquidation, not every company is suitable for the procedure as a such Levenstein warns directors to be careful before embarking on this road.