All Eyes on South Africa
Whether it is the Oscar-nominated film Invictus, the polygamous ways of its President or the Event of the Year – the FIFA 2010 World Cup, it appears that the current media focus is firmly on South Africa.
TMP, however, is keeping a close eye on this emerging economy for an entirely different reason – the impending enactment of recently drafted Insolvency legislation.
South Africa’s insolvency law has been in dire need of a re-haul since its 1936 initial drafting. July 2010 sees the arrival a new insolvency era and process – the aptly named Business Rescue.
Business Rescue
On the face of it, it appears that Business Rescue is an assisted CVA which is binding on all creditors regardless of their security. The professional implementing the Business Rescue Plan is a Business Rescue Practitioner (“BRP”) – so much easier to market than an Insolvency Practitioner!
Features
Interesting features of Business Rescue include:
- Secured creditors have no special rights to advance notice, or
- the ability to appoint their own BRP until proceedings have commenced (and then only by leave of the Court).
- Directors will need to inform all stakeholders (including shareholders, creditors, employees and employee representatives) why they have elected not appointed a BRP if it is unlikely to be able to pay the company’s debts as they fall due in the immediate six months – an extremely onerous reporting task!
- Standardised charge-out rates prescribed by the Court.
- The allowance of success-based contingencies.
Watch this space
With an office already long-established in Cape Town and expertise and resources readily available, the partners and staff at TMP are closely observing developments in this emerging market.