Lawyers, Does Your Clients Business Have Sufficient Value to be Rescued?

Peter Gordon

Peter has run his own consultancy practice since 2004, more recently trading as Crest Capital. Peter’s experience ranges from mergers & acquisitions, capital raising, project financing, financial structuring, risk evaluation, capital restructuring, business rescue and turnarounds, mediation, arbitration, dispute resolution, court appointed work, strategy formulation, mentoring and training.

Prior to forming Crest, Peter was an executive member of Absa Capital and carried executive responsibility for all Absa’s foreign operations at Board level. He qualified as a chartered accountant in 1984 and soon thereafter moved to London where he worked in the financial sector for 9 years.

He returned to South Africa in 1995 to join Absa. He has been involved at executive level in a number of charities and sat of the Council of St Johns College for 9 years, where he chaired the finance committee. He is a member of the South African Institute of Chartered Accountants and the Turnaround Management Association.

Listen to my 12 min interview with ScottCundill.com on "Does your Client’s Business have Sufficient Value to be Rescued?"

Business rescue is still relatively new to SA with direction being sought from the courts on a regular basis. Be cautious of both the entrepreneurial client who believes everything will be hunky-dory tomorrow as well as the opportunistic Business Rescue Practitioner  (BRP) trawling the corporate landscape who may have limited rescue and turnaround experience.

To rescue or not?

A successful business rescue is one that provides a better return to creditors than a liquidation dividend would, whether through business turnaround or a controlled wind-down of the business. Can this be achieved? If there is still a market for the company’s product and the company has the ability to deliver to market at the right price and appropriate quality, then there is probably a business worth saving. Alternatively, if assets are owned which should fetch a better price if sold over a period of time rather than in a fire-sale, then a wind-down  in rescue should be considered.

And how to respond to the overly confident entrepreneur - do a reality check as “hope is not a plan”.

And the opportunistic BRP - is he or she savvy in business and a person who can be trusted? Good accountants, lawyers and insolvency practitioners do not necessarily make good BRP’s. Rescue involves a deep understanding of how businesses operate; from the identification, or indeed creation of a market, to the successful delivery to market, with the main goal of turning productive efforts into cash.

Fortunately, the law favours the BRP, provided they are able to come up with a rescue plan that is realistic and achievable and in so doing, garner the trust and support of the majority of the creditors.

Contact Me

Peter Gordon 082 458 8792

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