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Companies Act, 2008 (Act No. 71 of 2008)

Chapter 6 : Business Rescue and Compromise with Creditors

Part B : Practitioner’s functions and terms of appointment

141. Investigation of affairs of company

 

 

1) As soon as practicable after being appointed, a practitioner must investigate the company’s affairs, business, property, and financial situation, and after having done so, consider whether there is any reasonable prospect of the company being rescued.

 

2) If, at any time during business rescue proceedings, the practitioner concludes that—
a) there is no reasonable prospect for the company to be rescued, the practitioner must—
i) so inform the court, the company, and all affected persons in the prescribed manner; and
ii) apply to the court for an order discontinuing the business rescue proceedings and placing the company into liquidation;
b) there no longer are reasonable grounds to believe that the company is financially distressed, the practitioner must so inform the court, the company, and all affected persons in the prescribed manner, and—
i) if the business rescue process was confirmed by a court order in terms of section 130, or initiated by an application to the court in terms of section 131, apply to a court for an order terminating the business rescue proceedings; or
ii) otherwise, file a notice of termination of the business rescue proceedings; or
c) there is evidence, in the dealings of the company before the business rescue proceedings began, of—
i) voidable transactions, or the failure by the company or any director to perform any material obligation relating to the company, the practitioner must take any necessary steps to rectify the matter and may direct the management to take appropriate steps;
ii) reckless trading, fraud or other contravention of any law relating to the company, the practitioner must—
aa) forward the evidence to the appropriate authority for further investigation and possible prosecution; and
bb) direct the management to take any necessary steps to rectify the matter, including recovering any misappropriated assets of the company.

 

3) A court to which an application has been made in terms of subsection (2)(a)(ii) may make the order applied for, or any other order that the court considers appropriate in the circumstances.