The long anticipated new Companies Act No. 71 of 2008 (the Act) was promulgated in April 2009 and is expected to become effective on 1 April 2011. The Act fundamentally re-writes South African company law and accordingly will have far reaching effects.
Chapter 6 of the Act, which deals with business rescue and compromises with creditors, effectively replaces the existing judicial management provisions of the old Companies Act No. 61 of 1973 (the old Act), with a modern business rescue regime.
“Business rescue” means proceedings to facilitate the rehabilitation of a company that is financially distressed1 by providing for the temporary supervision of the company and of the management of its affairs, business and property, as well as a temporary moratorium on the rights of claimants against the company or in respect of property in its possession.
Written by Eric Levenstein, Director at Werksmans Attorneys