The goal of debt collection is to ultimately decrease a Company’s exposure to bad debt and improve its bad debt statistics, thereby contributing to the Company’s financial health. Dynamic Debt Solutions has a ‘no collection – no fee’ policy that offers companies certainty in terms of costs.
Legally speaking, when your liabilities exceed your assets, you are insolvent. The only effective remedy is to apply to court for acceptance of the surrender of your estate. The effect of a sequestration order is that creditors must claim from the insolvent estate and not from the individual.
If it is foreseeable that your business (Company or Closed Corporation) will not be in a position to pay its debts as and when it falls due in the next six months, you are by law obliged to either apply for business rescue (see below) or file a special resolution by shareholders for the business to be wound up by the court.
Voluntary winding-up by members or shareholders of a Company or Close Corporation:
This process is used when the purpose for which the company was incorporated has been realized and it has no outstanding debts. The members adopt a special resolution to nominate a liquidator to administer the winding-up process of the Company or Close Corporation.
Voluntary winding-up by creditors of a Company or Close Corporation:
This process is applied by the members of a Company that is unable to pay its debts. After completion of the prescribed CM 100 form, a special resolution is adopted and registered. Once the special resolution is registered, the liquidation of the Company commences. The liquidator is appointed by the Master of the High Court to wind-up the affairs of the Company or Close Corporation.
The New Companies Act makes provision for compromises to be reached with creditors. The board of a Company may propose an arrangement or compromise of its financial obligation to all of its creditors, or to all of the members of any class of its creditors. In terms of this compromise, creditors may agree to accept payment of a certain percentage of the debt owed to them or grant an extension for payments.
Rehabilitation is the legal process that relieves the insolvent of the legal implications of being declared insolvent and placing the insolvent in the same position as that of a person who has not been declared insolvent. This process occurs automatically in certain instances, but usually by Order of Court.
Business Rescue aims to assist the rehabilitation of a Company that is financially in distress by providing for the temporary supervision of the company and management of its affairs, business, as well as property by a Business Rescue Practitioner. It offers a temporary halt on the rights of claimants against the company or property in its possession and the development and implementation of a business rescue plan to rescue the Company by restructuring its business, property, debt, affairs, other liabilities and equity.
How is a Company placed in Business Rescue?
There are two ways in which a company can be placed in business rescue: when the board of directors resolves that the company voluntarily commences business rescue proceedings or when an affected person makes a formal application to the High Court for an order placing the company under supervision and commencing business rescue proceedings
When is it time?
When it appears to be reasonably unlikely that the company will be able to pay all of its debts as they become due and payable within the immediately ensuing six months (commercial insolvency); or it appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months (factual insolvency)
The aim of business rescue is to restructure the affairs of a company in such a way that either maximises the likelihood of the company continuing in existence on a solvent basis, or results in a better return for the creditors or shareholders of the company than would ordinarily result from the liquidation of the company.
We are the business rescue specialists. If this is you, let us help