In our recent blogs speaking about business rescue, we often refer to the "business rescue practitioner." But who and what is this exactly?
The business rescue practitioner refers to one person or more persons jointly who is appointed to oversee a company which has been placed under business rescue. The business rescue practitioner is in essence the custodian of the business rescue proceedings and offers stewardship, expertise and managerial control to the company and its stakeholders during the business rescue process.
What are the requirements?
In order to serve as business rescue practitioner, certain requirements prescribed by the Companies Act 71 of 2008 (“Companies Act”) need to be met. Although formal qualifications are not necessarily a prerequisite, the business rescue practitioner must be a suitably qualified professional and a member in good standing of a legal, accounting or business management profession. The business rescue practitioner must be independent from the company and able to discharge his/her duties with integrity, impartiality and objectivity. Lastly, the business rescue practitioner must be licensed by the Companies and Intellectual Property Commission (the “CIPC”) to practice as a business rescue practitioner.
How do you become a business rescue practitioner?
In order to be licensed as a business rescue practitioner by the CIPC, an applicant has to demonstrate experience in working in distressed business environments and also have extensive experience in business turnaround practice, such as a legal practitioner, auditor or business advisor. An applicant’s experience in business turnaround practice can be determined by evaluating activities of a professional nature which the applicant has engaged in during the course and scope of his/her career that are comparable to the functions of a business rescue practitioner as prescribed by the Companies Act.
A comprehensive resume must be submitted to the CIPC that details the applicant’s history and experience in business turnaround practice and the resume must be accompanied by a motivation letter that clearly indicates for which category the applicant wishes to be licensed (for example as a senior practitioner, an experienced practitioner or a junior practitioner) as well as references and evidence that substantiates the information in the resume and the motivation letter.
What happens after the business rescue practitioner has been appointed?
Once a business rescue practitioner is formally appointed as the business rescue practitioner of a company, the business rescue practitioner takes full management control of the affairs of the company. The most noteworthy duty of the business rescue practitioner is to prepare a business rescue plan that will be implemented (with the approval of the creditors of the company) with the aim to either return the company to a solvent state or to provide the creditors of a company with a better return than they would have ordinarily received in the event that the company was liquidated.
Stay tuned for our next blog where we will have an in-depth look at the duties and responsibilities of the business rescue practitioner.
*By Candice Reynders and Linki Scholtz