MRL3701 Study Unit 24 - Business Rescue And Compromise | Questions And Answers
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BUSINESS RESCUE - To facilitate the rehabilitation of a financially distressed company.
TO FACILITATE REHABILITATION OF COMPANY OR CC IN FINANCIAL DISTRESS THROUGH - 1. temporary
supervision of the company and the management of its affairs, business and property.
2. a temporary moratorium on the rights of claimants against the company or in respect of property in
its possession
3 the development and implementation of a plan to rescue the company by restructuring its affairs,
business, property,debt and other liabilities, and equity in a manner that maximizes the likelihood of it
continuing in existence on a solvent basis or if this is not possible that results in a better return for the
company creditors or shareholders than would result from the immediate liquidation of the company.
VOLUNTARY BUSINESS RESCUE (DIRECTORS RESOLUTION) - Board of Directors may resolve that the
company voluntarily begins business rescue proceedings and may place the company under supervision
if:
a. the board has reasonable grounds to believe that the company is financially distressed and.
b. there appears to be a reasonable prospect of rescuing the company.
A COMPANY IS FINANCIAL DISTRESSED IF - a. 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.
b. it appears to be reasonably likely that the company will become insolvent within the immediately
ensuing six months.
WITHIN 5 BUSINESS DAYS AFTER FILING THE RESOLUTION TO COMMENCE BUSINESS RESCUE
PROCEEDINGS THE COMPANY MUST - 1. publish a notice of the resolution and its effective date, in the
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