Businesses experience decline and distress for many reasons. New technologies may emerge, customer preference may change, internal efficiencies may decline, or the business environment may experience shifts. And then, there is also the unpredictable influence of disasters and pandemics, such as currently experienced with Covid-19.
When a business is insolvent with no prospect of returning to profitability, there is no other possibility but to stop trading and liquidate, but there are options available for businesses with a prospect of returning to profitability.
“When a business that is experiencing distress still has the potential to turn the corner but needs the breathing space to get its affairs in order, without worrying about the immediate demands of creditors, Business Rescue is a real option,” says Mwendabai Kalaluka, Managing Partner of IABC Consultants and Chairperson of the Business Rescue Committee of the Institute of Business Advisors of Southern Africa (IBASA).
Kalaluka is one of the panellists on the upcoming episode of the IBASA & EPI Webinar Series where Business Rescue will be explored as an option for small businesses experiencing distress. Vuyani Nkohla, Senior Manager: DMP at the CIPC, and Dr Kenneth Moodley, Director at Nikshen Consulting, will be the other panellists on the webinar.
“Advising Your Small Business Clients Under Distress.
Is Business Rescue an option?
Business Rescue Practitioners Mwendabai Kalaluka and Kenneth Moodley are joined by Vuyani Nkohla of the CIPC to explore the implementation of Business Rescue for small businesses.
Thursday 20 July August from 11h30 to 12h45
<< CLICK HERE >> to book your place
The Companies Act of 2008 allows for Business Rescue as the“proceedings to facilitate the rehabilitation of a company that is financially distressed”. It is a highly regulated process that must follow the prescribed steps through which a Business Rescue Practitioner is appointed for the temporary supervision of the distressed business based on a Business Rescue Plan that is approved by the courts.
When a business is placed under rescue, creditors have to park their claims against the business so that it may be given the opportunity to create a Business Rescue Plan and implement the required restructuring, so that it may return to profitability.
“The process followed with Business Rescue offers a very suitable solution for many businesses experiencing severe financial distress, but not for all businesses,” says Kalaluka. “Many businesses may be too small to cover the various costs involved in the Business Rescue process, so for them, it is important to detect problems early on and start with a turn-around plan before the creditors are at the door.”
Dr Moodley, who is also a panellist on the webinar, concurs that there are many potential pitfalls involved in Business Rescue. “It is important for the success of a Business Rescue, that it is clearly understood from the start that this is the most suitable route for business and that it offers the best benefits for all the involved parties,” he says. “Other options may be better, especially when returning to profitability is unlikely, if the business is too small to afford the process, or if the business may achieve profitability without a formal Business Rescue such as engaging with suitable professionals in developing and implementing a turnaround strategy.”
The third panellist on the upcoming webinar is Vuyani Nkohla, Senior Manager at the CIPC. He is responsible for the registration for Business Rescue Practitioners at the Commission for Intellectual Property and Companies (CIPC).
- To join the CPD webinar, you can << REGISTER HERE >>.
- Christoff Oosthuysen is the webinar host and Founding CEO of the Entrepreneurial Planning Institute (EPI).