REMEDIES ON THE IMPACT OF COVID 19 ON FINANCIAL COMMITMENTS OF INDIVIDUALS AND BUSINESSES
The fact that Covid-19 has had an extreme impact in our economy is undeniable. Businesses and individuals are in dire need of solutions to the financial distress that they find themselves in. A lot of individuals and businesses were in distress even before the Covid-19 outbreak and the outbreak was the final blow. There may be certain reliefs available such as the UIF benefits, but what are your options should you not qualify for the benefits or the benefits do not provide you or your business with sufficient relief?
Mediation and Negotiation
The first reasonable step individuals and businesses need to exhaust are mediation and negotiation with creditors during this period of uncertainty. It is essential that individuals and businesses utilise best efforts in good faith to amicably resolve disputes between themselves. Should your efforts to amicably resolve disputes remain unsuccessful, contact your attorney immediately for assistance.
If the mediation and negotiation fails, the following options are also available to individuals for assistance:
- Debt Counselling
Debt Counselling assists over indebted consumers by developing affordable repayment plans in order to regain control over your finances.
- Voluntary Sequestration:
This is where an individual surrenders their estate which consists of all your assets and liabilities by way of a High Court Application. Your estate will be surrendered to your creditors and you will be declared insolvent. The Master’s office also plays a role in the process as they will appoint a trustee to take control of your estate. One of the biggest advantages of voluntary sequestration is that after the court order has been granted, all creditors have to lodge claims against your estate and cannot hold you personally liable any more.
The following options are also available for businesses that can’t meet its financial commitments:
- Business rescue:
Business rescue means proceedings aimed to facilitate the rehabilitation of a business that is financially distressed.
The companies act defines “Financially distressed” to mean that:
“(i) 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; or
(ii) it appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months;”
Businesses can be place under business rescue in the following ways:
1.When the board of directors of a company resolves that the company voluntarily commence business rescue proceedings; and
2. When an affected person makes a formal application to court.
- Voluntary Liquidation:
This is where the members or directors of a business, also by way of a High Court Application, apply to have the business liquidated. As soon as the court grants a provisional liquidation order, all of the creditors of the business have to be notified and they get the opportunity to oppose the final liquidation. If no objections are received, the court will grant the final liquidation order and a liquidator will be appointed to deal with the assets and liabilities.
The biggest advantage of this process is also that the creditors may not proceed with any further legal action against the business or its members or directors.
It is of utmost importance that the affected party complies with his/her or its obligations to mitigate the effects of the current financial crisis in good faith.
If all else fails and the affected party wishes to rely on other avenues as mentioned above, contact Burden Swart & Botha attorneys for assistance to find the best suitable solution for you or your business.
BSB attorneys has 25 years’ experience in assisting businesses with every step of the process with professionalism and compassion. You can count on us in your time of need. Please don’t hesitate to contact us through our website via email firstname.lastname@example.org