Business Rescue Can Be The Answer To Financial Distress

Covid-19 and the resultant lockdown have seen business rescue matters at the forefront now, more than ever. With many fearing business rescue and the potential loss with extremely low returns for creditors, there are also occasions where business rescue results in a positive way forward. A recent example of this is where business rescue practitioners and legal specialists obtained a significant return to creditors in a highly publicised horseracing matter.

JSE listed Phumelela Gaming & Leisure, who operate in seven of South Africa’s nine provinces, ran into financial difficulties which saw it being placed under Business Rescue in May this year.

On 1 September 2020 a Business Rescue Plan was approved by a staggering 99% of the creditors of Phumelela. The Plan will see creditors receive a guaranteed 72c in the Rand with the more likely outcome being a return of 100c in the Rand and potentially even a return for shareholders. This is a phenomenal result accomplished by Business Rescue Practitioner John Evans of RSAdvisors and Fluxmans attorney Colin Strime, and means that South Africa’s horseracing industry is no longer in jeopardy.

In line with global trends, Business rescue came into effect in South Africa in 2011 under chapter 6 of the new Companies Act. It assists in helping financially distressed companies as well as affording them the opportunity, if possible, to pay their creditors some of what is owed to them. The exceptional result of Phumelela’s Plan is testament to the benefits of an excellent business rescue plan as provided by RSAdvisors and Fluxmans attorneys who are leading specialists in this field.