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Business rescue not for the chronically ill

December 21, 2015

The first question that should be asked when considering business rescue is “ do we have a business?”  Presently about 80% of businesses  that are being considered for business rescue do not qualify purely because they are to far gone – to critically ill.

In order to establish if there is a possibility of the business becoming successful again we need answers to some of the following questions:Does the industry that business is conducted in have a future? If the business is for instance competing with the internet such as video renting, printed advertising or even the traditional book store, you are in trouble.

  • Does the industry that business is conducted in have a future? If the business is for instance competing with the internet such as video renting, printed advertising or even the traditional book store, you are in trouble.
  • Does the industry that business is conducted in have a future? If the business is for instance competing with the internet such as video renting, printed advertising or even the traditional book store, you are in trouble.Is management qualified, able and focused to make the business work? In many instances a business (especially an owner managed business) find itself in trouble not because of the industry but because of personal problems which lead to a lack of focus and motivation.
  • Is management qualified, able and focused to make the business work? In many instances a business (especially an owner managed business) find itself in trouble not because of the industry but because of personal problems which lead to a lack of focus and motivation.How long has the business been in existence and in what stage of the life cycle the business finds itself in? Is it for instance a
  • How long has the business been in existence and in what stage of the life cycle the business finds itself in? Is it for instance a start up that needs to overcome the normal hurdles or is it perhaps a business in decline that needs to look at diversification. It could be a business that has grown to fast and is in need of recapitalization and qualified staff.
  • Could a cost cutting and refocusing exercise make a difference? Normally this would form part of most rescue plans.
  • What are the qualities we are looking for in the business rescue practitioner that will be able to successfully rescue the business and where will we find him?
  • Is outside funding necessary in order to implement a business rescue plan?
  • What is the nature of the creditors and who are they? What security do they have and will it be possible to compromise creditors (to pay them less than what they are being owed) in order to rescue the business?

Disclaimer: The contents and information provided above are generalised and must not be acted upon as legal advice.