This is the most under-utilized tool available to businesses within the insolvency framework, pre-packs as they are called in the US, are extremely useful to distressed firms. They reduce cost radically, speed up implementation, greatly increase the likelihood of planning approval and reflect very favourably on the distressed businesses leadership team.
Can a BRP who has engaged with the company, creditors or shareholders prior to the commencement of business rescue be appointed as a practitioner?
Section 138 of the Act sets out the requirements for qualification as a business rescue practitioner. In particular Section 138(1)(e) provides that “A person may be appointed as the business rescue practitioner of a company only if the person...(e) does not have any other relationship with the company such as would lead a reasonable and informed third party to conclude that the integrity, impartiality or objectivity of that person is compromised by that relationship”.
A business rescue practitioner will not, merely by virtue of his prior engagement with creditors or shareholders, be held to lack independence. Something more, some “other relationship” will need to exist.
Banks (and clever creditors) will look very favourably on a business that has been transparent and proactive in entering rescue with properly formulated plans. Indeed it addresses their biggest complaint about rescue which is the great lack of comfort in plans presented to them. This addresses this issue head on.
Everything needed to guarantee approval from a creditor, which means, a plan that provides the following.