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My business is experiencing financial distress: What are my options?
14 April 2020,
Dr Damian Viviers
2002
Over the last few weeks, it has become strikingly evident for many businesses that the Covid-19 pandemic, the national lockdown and the global recession have had an adverse economic effect on their ability to operate and possibly even survive, especially over the short term, and especially while this crisis continues. These businesses are experiencing pressure in terms of cash flow and their ability to cover their costs, including paying their employees.
Current survival planning tactics
considered by businesses range from staff retrenchments, salary cuts, expense reduction and mechanisms for continued income generation, to options for obtaining financial assistance. However,
one option that is generally overlooked, discounted or too hastily dismissed
are the tools provided for in terms of the Companies Act 71 of 2008 and that were designed specifically for these types of circumstances. Such include
the option of companies engaging business rescue proceedings
, which is an efficient means of seeing companies through difficult times and getting them back on a path to profitability. It must be kept in mind that this option is available even where liquidation was never a consideration.
Keep an eye on my blog for further posts on business rescue and how this may assist your business.
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