You can rescue your business

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.