The Effects of Business Rescue on Employees and Employers
The SA Express situation is so unfortunate. Different to a liquidation, employees in a business rescue process are protected as preferent unsecured creditors and accordingly, any remuneration, that is due and payable by a company to an employee prior to, or during, Business Rescue Proceedings, will be regarded as “post-commencement financing”. This means that the employee will be paid next in line, after the Business Rescue Practitioner.
Read this story from Schindlers Attorneys at https://www.schindlers.co.za/2020/the-effects-of-business-rescue-on-employees-and-employers.
The devastating economic effects posed by the Corona Virus Disease 2019 (COVID-19) have left many South Africans wondering whether their jobs are on the line and many business owners fighting against the odds to ensure their businesses’ survival. One way to negate the adverse financial threats presented by the rapid spread of this virus on employers and employees is by placing ailing companies under Business Rescue. Business Rescue is a mechanism provided for in terms of Chapter 6 of the Companies Act 71 of 2008 (“the Companies Act”), which is aimed at restructuring the affairs of a company in such a way that will facilitate the continuance of the company on a solvent basis.