Introduction:The objective of CureDebt Liquidation Experts is to make business debt relief options easy to understand.
Every business owner fears the day they might have to consider liquidation as a potential solution to their financial situation. However, people frequently ask, 'What is liquidation?'.
As if liquidation is not daunting enough for the layman, there are numerous alternative business debt solutions, but no one is quite certain how it all works and what it all entails and if this is really a plausible solution for your financial situation.
Discover innovative strategies and expert advice that will empower you to overcome financial challenges and achieve lasting success. CureDebt Liquidation Experts are well versed in all business and individual debt relief solutions. We are accredited by the National Credit Regulator.
Join us today and unlock the door to a brighter future for your business.
Venture into the world of business debt relief solutions alongside our team of experts.
Uncover the potential of liquidation and explore alternative business debt relief solutions for over-indebted businesses. Are you a business owner struggling with the difficult task of meeting your monthly obligations? If so, you're not alone. This is the pressing question that keeps every entrepreneur awake at night. Learn more about the range of options available to businesses dealing with financial challenges.
No need to fret, when troubles arise, CureDebt will find solutions, oh so wise! With their expertise, they'll ease your strife and guide you to a debt-free life!
Rest assured, there is a solution for you. Avoid delaying until the last moment. Act now and connect with a trusted business debt relief expert without delay. Explore a world of endless possibilities with this innovative approach. CureDebt Liquidation Experts, we can help you!
Oh, the emotional toll it takes, my dear, And the feelings of directors and shareholders, I fear. During this difficult time, they feel quite blue, with worries and concerns, they don't know what to do!
It all started with a dream.
Every business originates from a vision, and no one ever envisions it encountering financial challenges or failing, ultimately leading to its liquidation as a last resort. The dream is always to grow this dream into a reality. Develop a robust enterprise to meet the financial needs of you and your family.
The Harsh Reality:
However, the reality is that many businesses are burdened by unsurmountable amounts of debt. Whether it was part of the original dream or not. Building a business is not easy, and in our current economic climate it is nearly impossible, especially after the pandemic.
Statistics SA – Financial year 2022/2023
Statistics of liquidations in South Africa for the period 2022–2023 clearly indicate that more and more companies are experiencing financial challenges. Bear in mind that these statistics are only of companies registered at CIPC. This doesn’t constitute the sole proprietors that’s sequestrating due to business debt.
Emotional turmoil that precedes the decision.This is not merely a business that is struggling to survive. It is also the culmination of someone's life's work, aspirations, money, time, sweat, and tears. Business owners endure significant emotional distress, anxiety, guilt, and disappointment, and they then associate the financial difficulties with their own shortcomings. CureDebt Liquidation experts understand the emotional turmoil and will take the stress and worries away from you and we will deal with your creditors.
This businessman's dream has been shattered. In an instant, he has lost everything he had worked for. These individuals experience profound emotional turmoil. In numerous cases, individuals experience a nervous breakdown and attempt to commit suicide due to their inability to cope with the tension and emotional turmoil.
In search of guidance...
Upon realising the true extent of the company's financial difficulties, directors and shareholders often seek professional guidance to explore potential remedies and alternatives to liquidation. Entrepreneurs have exhausted all available methods for reducing and managing monthly expenses by now. Hopefully they’ve contacted one of CureDebts’ Liquidation Experts to assist them in their search for guidance.
Business debt relief solutions:
In South Africa, businesses struggling financially have access to a variety of business debt relief solutions. By talking to one of CureDebts’ Liquidation Experts, they can explain the different business debt relief solutions to you.
These solutions include:1. Bridging Finance / Business Loan
2. Business Debt Mediation.
3. Business Rescue.
4. Business Liquidation
Let’s have a quick look at the different business debt relief solutions available in South Africa:1. Business financing / Business loans
There are several business finance houses, such as
Pollan and
Bridgement, and then there are the
major banks in South Africa, such as ABSA, FNB, Standard Bank, Nedbank, and so on.
How do I decide if this is the solution or not?
When considering this option, you must be certain that your business can afford to repay this loan. None of these business finance houses will grant you a business loan if the directors of the company don’t sign surety for the loan. Bear in mind that it is hard to be objective when experiencing financial difficulties and therefore it is always better to appoint a professional like CureDebt Liquidation Experts to assist you with free advice herein.
Bridging finance:
This could be a viable solution, but only if you use the loan as bridging finance. If you are certain that there's going to be sufficient revenue in the business account soon and this will provide you with the necessary funds to settle the loan as soon as possible or at least be able to service its contractual instalment monthly until it is paid in full.
A good example in this scenario would be, for instance: If you’ve signed a contract for a few million, and you’re waiting for the funds to be allocated to your account, but it’s still going to take a month or two before it’s going to be available in the bank account, and in the meantime, you need funds to service your monthly obligations while waiting on these funds. Therefore, this decision should be based on logic and good business sense rather than emotion.
2. Business Debt Mediation
When we have a look at this solution, it is better than having to close the business or take out a loan. Contact a business debt expert that will do a free assessment and then continue to negotiate on your behalf with the creditors for an alternative payment plan, to ensure that the business is not being blacklisted and repays the debt in affordable monthly instalments. However, this tend to be a short-term solution. This is not something that the creditors will accept as a long-term solution.
3. Business rescue
This solution involves filing a court application, which can be costly and may not be the optimal choice for small businesses. With this business debt relief solution, the directors of the company or its creditors can bring an application in the High Court to have the business placed under business rescue.
What is business rescue in laymen terms?
Business rescue in essence is almost like debt review but for a business. Some differences are that with business rescue the directors of the business lose control of the business, to the business rescue practitioner. Which in turn will make all financial decisions pertaining to the business, renegotiate contracts if necessary and payment plans of current financial agreements, including but not limited to which service providers can be paid or not, amounts that must be paid, whether orders for production materials can be placed and if so where and how much, etc.
What is the purpose of the Business rescue practitioner?
Essentially, the business rescue practitioner acts as a proxy for the business. The business rescue practitioner's purpose is to manage the business's finances and take control of all decisions, aiming to restore the business to a financially healthy state once again. When this is achieved, the business will be removed from business rescue and the directors will regain control of the business.
What are the cost implications of the Business Rescue process from start to finish?
Business rescue is a high court application, which entails attorney and advocate fees, and the services of the appointed business rescue practitioners’ fees. It is quite costly, especially if it’s a small to medium enterprises, however the business practitioner fees are calculated based on affordability, like I said previously, a lot like debt review.
This can be a possible business debt relief solution to you, if:
You need time to work on finding an investor or finalising new contracts. Once the business is financially stable, the business rescue practitioner will then provide a report that grant directors permission to have the business rescue order rescinded and you’ll be able to take control of the business once again.
4. Liquidation in South Africa | What is Liquidation?What is liquidation?
Liquidation occurs when a company is declared insolvent. Following below is different terminology known in the industry for the liquidation of a business. Some are legal terms and other layman terms. However, it is important to know what the process entails and if this might be a possible solution for your company.
Liquidations’ also known as:• Winding up
• Declaring bankruptcy for a business
• Liquidation Application
• Declaring company insolvency
Different ways = Different cost implications:
One never overlooks the cost implications when considering a company liquidation. The business is already struggling financially; the most cost-effective process tends to be the wiser route to follow. There are several ways of winding up a company, all with different cost implications. It is, however, advisable to consult with a business debt relief expert to assist you with guidance before making any final decisions regarding any business debt solutions.
Here is a list of ways to liquidate a company, ranging from the least expensive to the most expensive:
• Voluntary Liquidation via CIPC
• Voluntary Liquidation via High Court Application
• Compulsory Liquidation via High Court Application
When is liquidation the best solution?
If the business is no longer able to service its monthly obligations and there is no possibility of future income that is substantial enough to service its monthly obligations within the next six (6) months, then liquidation becomes the only option.
Business Liquidation and Director Liability
When a company decides to proceed with the liquidation process, it must cease trading. Due to the liquidation process, all debts registered in the company's name, including SARS debt, will be written off.
Directors' Liability
However, it is important to remember that this is only applicable to company debt for which no director or shareholder has signed surety on the company's behalf. Directors and shareholders who signed surety for any company debt will bear personal liability for these debts.
5. What’s the Companies Act’s take on over-indebted businesses?Section 22(1) of the Companies Act
In terms of
Section 22(1) of the Companies Act of South Africa, it is clear that if a company is not in a position to service its monthly obligations, it is trading recklessly.
Section 77(3) of the Companies Act
If this is indeed the case,
Section 77(3) holds the director(s) of the company liable for any damages resulting from their negligence.
Section 214 of the Companies Act
Examining
Section 214 of the South African Companies Act reveals the seriousness of the legislators' intent when they passed this act, which explicitly states that if a director engages in reckless trading, they could face criminal charges and potentially even jail time.
The final decision: Which business debt solution is the best for your business?
Based on the variables mentioned above, it is clear that liquidating a company that is facing significant financial challenges is more advantageous. If there is no reasonable expectation of being able to service monthly obligations within the next six months, CureDebt Liquidation Experts would recommend liquidating the company to eliminate the possibility of reckless trading.
