INSOLVENCY & RE-STRUCTURING

Insolvency is daily news. Liquidations are however no longer just about companies that cannot pay their debts. Liquidation has become a sophisticated tool of commercial strategising and restructuring, and the new Business Rescue dispensation will add a whole new dimension, both for creditors who want to recover and for companies needing protection pending a restructuring.

Too often, parties to a commercial transaction do not give sufficient consideration to the consequences of one the parties being liquidated during the course of the contract. Insolvency has far-reaching consequences for a commercial contract, and the parties should take advice before contracting. This includes whether a contract itself may be set aside as an impeachable transaction, whether or not certain clauses in a contract may be enforceable, and the efficacy and enforceability of specific security arrangements in the event of the liquidation of one of the parties.

The Insolvency and Re-structuring practice of Bowman Gilfillan straddles both the commercial & litigation departments. It covers all aspects of liquidations and insolvency, both corporate and personal, and ranging from applications to liquidate companies both in South Africa and abroad, sequestrations and the voluntary surrender of an individual’s estate, advising shareholders on the voluntary winding up of companies, cross-border insolvency, insolvency-related litigation matters, judicial management, offers of compromise, schemes of arrangement, proof of claims, through to the implications of insolvency on commercial transactions and industry.

The best method of corporate recovery may not be by way of a summons. With our extensive litigation experience, we can advise on the most expedient method of corporate recovery, which may be through a liquidation or sequestration application. Focused advice can be given on the advantages to be obtained by utilising the winding-up procedure as an alternative, particularly given the delays in the Courts.

If you are a creditor, you will probably need advice regarding the efficacy and ranking of any securities which you may hold and any steps which should be taken to improve your position.

Creditors wanting to maximise their dividends should be warned not to simply leave the liquidation process to take its course. We have conducted numerous investigations on behalf of creditors and liquidators, to assess and advise on the validity of claims submitted, the possibility of proceedings against directors and others personally, and the setting aside of impeachable transactions. This is designed ultimately to lead to a recovery of assets or funds for the benefit of creditors.

Should you wish to know more about this practice area please contact the following members:

Adam Harris
James McKinnell
Jason Smit
Claire van Zuylen
Peter Whelan