It is heart-breaking for our team to see the impact load-shedding has had on businesses in South Africa and we have been burning the midnight oil (quite literally) applying our knowledge to come up with the best course of action to try and resuscitate and rescue ailing companies, and initiate some kind of mediation with altercating board members and demanding creditors.
Financially distressed companies which are unable to reach an agreement with creditors as a result of the negative effects of the electricity crisis may have to consider business rescue and as a last resort, liquidation. In this instance, if actioned soon enough, it would be wise to consider business rescue as a structured, cost-efficient, effective method of returning a business to solvency that will be beneficial to all parties in some way or another, and ultimately achieve a better return rather than an immediate liquidation.
Furthermore, facilitated discussions between the conflicted parties, via mediation, will assist them in identifying issues, clarifying priorities, exploring areas of compromise and generating options to resolve disputes.
In my opinion, any outcome that avoids liquidation is a success and through considered, alternative dispute resolution methods along with solution-based advice, we can and have provided optimal outcomes, a life boat if you will, for our clients.
That light bulb moment, when they just get it and a mutually beneficial agreement can be reached!
Yours in law
Business rescue vs liquidation: What is the best option for my company?
If your company is in financial difficulty, due to load-shedding woes, mis-managed funds, unsettled debts or otherwise, there are really only two choices you have when it comes to legal options; that being business rescue or liquidation.
Business rescue – more pros than cons, but for whom?
Depending from whose perspective you are looking when it comes to the pros and cons of business rescue, all ‘affected persons’ have a vested interest in the success of the business rescue process. However, some parties may come out on the other side feeling a little hard done by, despite the many possible positives for the business and its creditors that are likely to occur.
South Africans must consider mediation before turning to courts
Attorneys should be advising clients to consider mediation as a possible resolution not only because of the financial benefits but also to save themselves a lot of unnecessary time delays in resolving matters. Veldhuizen stresses that disputing parties going the ADR route must make certain that, their mediator is qualified and reputable.
Mediation vs Litigation
Mediation, already popular internationally, is often overlooked as a solution for individuals and businesses to resolve disputes in South Africa. Not only has it proved to be cost-effective but more importantly, mediation is less destructive and fair, with speedier resolutions being reached compared to the lengthy litigation route which can take anything between two to four years.