Cape Town - The key reason why companies go into debt is
because they are not being paid on time, but you can buck this trend with business rescue.
Business rescue gives companies breathing space during tough
economic times and the chance to turn around their operations.
In the last 11 months, over 400 financially distressed
companies applied for rehabilitation, according to an overview of the Business Rescue landscape by BR specialists Webber Wentzel.
Webber Wentzel listed the top five reasons why companies go
into debt as:
- Not being paid on time
- Recession and poor market conditions
- Industrial strike action
- Increases in costs and overheads
- Regulatory issues
Out of the total 401 businesses that applied for business rescue since April last year, 175 came from the investment sector, 114 from the
wholesale and retail sector, 74 from manufacturing and 38 from the services
sector.
In terms of the Companies Act, 2008 the Business Rescue procedure broadly
involves the temporary supervision of the company and a temporary moratorium on
the rights of claimants against the company or against property in the company’s
possession while a plan to rehabilitate the company is approved and
implemented.
Click on the info graphic to see more of the South
African BR landscape.
Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.