Business rescue - Practice Questions

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University of Pretoria *

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Nov 24, 2024

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Business Rescue: Practice Questions Question 1 Company A is a printing shop based in Hatfield, Pretoria that has 15 employees including its inhouse bookkeeper. Company A’s business has slowed down significantly as students have not been using their services as a result of remote learning during the 2020/2021 academic year at the University of Pretoria. Company A’s bookkeeper realises in particular that Company A will not be able to pay the rent for its office space at the end of this month and that in six months, it will no longer be able to pay Nashua for the lease of the printing equipment which is core to its business. Other smaller contractual debts within company A are already overdue. However, the bookkeeper notes from the accounting records of the company that the directors of Company A are receiving inflated salaries that are beyond market value, which is affecting the Company’s cashflow. Based on these facts, answer the questions that follow. 1. What routes are available under the Companies Act for the commencement of business rescue proceedings? (2) 2. The bookkeeper, as an employee of Company A believes that if the company were to be placed under supervision and the salaries of the directors were to be restructured, the company would survive and be able to service all its debts. However, the directors have refused to take his suggestion as they have lavish lifestyles that they wish to maintain. Accordingly, the bookkeeper wishes to approach the court in order to have Company A placed under supervision and business rescue. Advise the bookkeeper on his prospects of success (8) 3. Assume that the liquidation proceedings have already been initiated, what will the impact be of the bookkeepers application for business rescue be, on the liquidation proceedings? (1) Question 2 Jason is a business rescue practitioner with 5 years’ experience in rescuing companies that have been financially distressed. He is approached by Electricity

Company SOC Ltd which is in financial distress and is struggling to provide consistent supply of electricity to South Africa due to its financial constraints. Jason is excited about this opportunity and is up for the challenge. Advise Jason on whether this is a role he can take up and provide reasons for your answer. (3) Question 3 3.1. When must a meeting of the creditors be convened by the business rescue practitioner? (1) 3.2. When must the business rescue plan be published by the business rescue practitioner? (1) 3.3. When will the business rescue proceedings be terminated? (5)

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