Business Rescue Causes Change to Property Auctions

A property investment company in trouble will be interested to hear about the changes recently made to the
South African Companies Act. These changes have been named; Business Rescue.

These changes will have a great impact on the auction market as currently, the auction market is acting as a sort of informal rescue for companies in heavy debt looking for a quick save.
Business rescue has the power to delay company liquidation as well as auctions.

What impact does this have on a company in debt issues? The bank is most likely going to be forced to act quicker when deciding whether or not a business needs to be liquidated and liquidation percentages are going to rise due to the banks not wanting the Business Rescue to get hold of the company first and delay the liquidations process which will cause the banks debt provisions and losses to increase.

This will effect auctions because the banks are going to try and speed up the process of auctioning business assets in order to cover their debts before Business Rescue comes into the picture.

Business Rescue is the corporate version of the National Credit act which helps to renegotiate payment rates for an individual suffering from debt issues. In these cases the creditor will suffer a loss as the interest rate repayment he was expecting to receive back is reduced drastically.

Business rescue works the same way but in a corporate manoeuvre.
It is therefore a good idea, if you own a company who is falling into financial issue, to research Business Rescue before the banks start to prevent you from playing out your safety net by forcing auctions before you have a moment to gather your wits about you.

Business Rescue in South Africa is rather similar to the United States Bankruptcy Code (Chapter 11). This code gives allowance for a debtors business assets and affairs to be re-organised.


Catherine is a contributing writer for bussiness premises. Visit office premises cape town cbd for more information.