Transcript Document

12 June 2013
TURNAROUND MANAGEMENT ASSOCIATION - SOUTHERN AFRICA
DO ALL ANSWERS LIE IN THE SKILL SET OF THE
BUSINESS RESCUE PRACTITIONER?
What did CIPC get?
Definition
“business rescue practitioner”
means a person appointed, or two or more persons appointed jointly, to
oversee a company during business rescue proceedings
Tasks
Facilitate the rehabilitation of a company by
(i) the temporary supervision of the company, and of the management of its
affairs, business and property;
(ii) a temporary moratorium on the rights of claimants against the company or in
respect of property in its possession; and
(iii) the development and implementation, if approved, of a plan to rescue the
company by restructuring its affairs, business, property, debt and other
liabilities, and equity in a manner that maximises the likelihood of the
company continuing in existence on a solvent basis or,
IF it is not possible for the company to so continue in existence, results
in a better return for the company’s creditors or shareholders than would result
from the immediate liquidation of the company
Guidance on Practitioners
• 138. Qualifications of practitioners
• Accreditation by Commission of legal, accounting or business
management profession or has been
• (b) has been licensed as such by the Commission in terms of subsection
(2);
– (2) For the purposes of subsection (1) (a) (ii), the Commission may
license any qualified person to practice in terms of this Chapter
and may suspend or withdraw any such licence in the prescribed
manner.
– Guidelines:
(c) is not subject to an order of probation in terms of section 162
(d) would not be disqualified from acting as a director of the
company in terms of section 69 (8);
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; and(f) is not related to a person
who has a relationship contemplated in paragraph (d).
What can CIPC do?
• CIPC can advise:
• 138 (3) The Minister to make regulations prescribing—
• (a) standards and procedures to be followed by the
Commission in carrying out its licensing functions and
powers in terms of this section; and
• (b) minimum qualifications for a person to practice
as a business rescue practitioner, including different
minimum qualifications for different categories of
companies.
• [S. 138 substituted by s. 88 of Act No. 3 of 2011.]
LICENSING
Licensing of Business Rescue Practitioner
• Licensed by the Commission, or
The Commission after receiving an application must either:
1.Issue a license as applied for in Form CoR 126.1
2.Issue a Conditional license on terms that are reasonable
3.Refuse the license
Categories of Practitioners:
1.Senior – 10 years or more
2.Experienced – 5 years or more
3.Junior – Less than 5 years
Joint appointments are allowed.
EXPECTATIONS
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Politicians
Banks
Trade Unions
Judges
Potential Business Rescue Practitioners
Business in Financial Distress
Labour
Can the purpose and objective
of this Act be met?
in a manner that balances the
rights and interests of all relevant
stakeholders
The Number of conditionally licensed
business rescue practitioners
• The CIPC has conditionally licensed 160 business rescue
practitioners with interim conditional licenses,
• These practitioners have been taking care of 1020
businesses that has opted to go into business rescue
• Practitioners receive a license for each of the ventures
they are taking care of.
• Once the project concludes the appointment and
license comes to an end.
• When the practitioner is nominated and wants to accept
a new appointment a new license is issued.
• The CIPC does not automatically licensed the
practitioner again, they must be compliant with
requirements of the Act in all existing ventures.
Practitioners in Provinces
2% 5%
1%
3%1%
E Cape (8)
Gauteng (86)
21%
KZN (21)
W Cape (33)
North West (5)
54%
13%
Limpopo (2)
Mpumalamga (2)
Free State (3)
Experience of Business Rescue
Practitioners
9%
34%
57%
Junior (15)
Senior (91)
Experienced (54)
Professions Represented
Attorney(33)
4%
21%
Liquidator (2)
1%
CA (17)
11%
Accountant (40)
38%
Business
Consultant(62)
25%
Attorney Liquidators (6)
Practitioners Licensed p/y
23%
28%
49%
2011 (46)
2012 (78)
2013 (36)
What have the BRP’s been up to ?
In August 2012 an audit was done by sending a
questionnaire to all practitioners and requesting
information on progress.
• 64 successes and 45 liquidations were reported.
• The success rate is approximately 55% of all
businesses that have concluded their rescue
operations. Real rate closer 12-15% taking into
account the pending rescues.
• Average turn around reported is 5.6 months.
Recently concluded Web Survey
• The number of jobs at the start of the projects were
reported to have been 5680 and at the end of the rescues
4256.
• Only 25% of the jobs were lost.
• The rescue effectively saved 75% of the jobs, where in
the case of a liquidation all jobs most probably would
have been lost.
• If we look at the number of dependents to a full time job
which is commonly calculated to be at least six (6) the
effect is more than 30 000 lives, that have been
effected positively.
• Many of the rescues reported on have not reached
substantial implementation of the business rescue plan
yet.
What have the BRP’s also been up to ?
Complaints! Complaints! Complaints!
Abuse of power, position, control.
Accepting non-rescue- able ventures.
Fees unjustifiably exorbitant.
Do not communicate.
Do not comply with the timelines of the Act
Do not stick to the terms of the business plan. Chop
and change as they go along
• Adding to the cost of liquidation
• Liquidate as a matter of cause, as this is all that is
known to the BRP
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Actual complaint received
• “ Lie in all business rescue matters
• Do not even know what the contents of the files are. They have
administration staff handle everything from the filing of the COR
123.1 to implementation/terminations.
• Lie about fee's and claims and get a lot of money out of clients
with no regard to creditors.
• Not being objective and conflict of interest between being
attorney of record and BRP
• Signatures are forged. Clients never even see the
affidavits/paper work that their signatures are found on.
Especially in business rescues.
• Refuses to take calls from clients and has administration staff
discuss matters with them - which they are not qualified to do.
International investor’s comment on BRP
• “I think I speak for everyone when I say that considering in
almost two years all you've done was threaten to liquidate the
companies and resign, the latter being your only successful
endeavour, we wont be considering you in the future for
anything anyway.
• In point of fact, what should happen is that you should be
sanctioned from ever being a BR Practioner again. ”
Impact on Landlord
• I am the Landlord, I want an investigation on above business recue
practitioner on the way he dealt with the process and how he willfully
mislead me as the tenant to suffer a financial loss.
• BRP told us that we cannot put the business in rescue out of our
building and that we didn’t need to worry because we have a
hypothec over the business.
• We were told that we where first preferential creditor to get our money.
That was with the first meeting. When I tried to engage again with BRP, I
was told that I need to speak through my attorney to him and that I
cannot engage with him in my private capacity. (
• Needless to say I also put myself further into debt due to attorney’s fees
accumulating).
• I, have never been invited or have attended any of these meetings. I
also objected through my attorney against the notices (where we were
supposed to have a meeting), No response from business recue
practitioner.
• I had at that stage a prospective buyer to purchase the building due to
us not receiving rent and falling behind on payments but when BRP
informed us that we cannot put the business out, the buyer lost interest.
Landlord, story continue
• I have been to the liquidator and have I been informed that I will not
get any money back of the debt of Rental and Water accounts that
built up.
• The reason for this is due to the Business Rescue practitioner’s account
of over R200 000, which excluded the attorney he used (they are still
waiting on the account – but will be around R80 000) and then the
liquidator needs to get paid. The assets sold wont fetch more than
R300 000 according to liquidator.
• The only persons who are gaining from this transaction is the business
recue practitioner (who knew they will be the super preference for their
accounts)
• I have been bullied by client where I did not know what my rights
where and I was mislead to suffer at the end a financial loss which are
having a devastating effect on my business.
• I am 16 years in business and have I never been put through this
process before. I was of the opinion that this process is to help and not
to leave a trial of financial distress and enriching an outside party who
mislead me as the main creditor. I ask you as the regulating authority
to please help me as this will have a devastating effect on my
business.”
General allegations by affected parties
• Not responding to queries, irregular communication and in our
opinion lack of skills
• In our opinion a lack of skills and poor communication
• Never able to get hold of him on email or telephone and not at
all sticking to the BR procedure, he does his own thing
• No communication despite several requests for updates on
matters and also not following the procedure ito monthly
reporting to creditors
• Irregular communication and also not sticking to the BR
procedure, in numerous entities failed to produce BR plans and
extension to publish these plans
• He does himself not know what is happening in his own matters
also not following the procedure ito reporting to creditors and
asking for extension to publish plans
March 2012 to April 2013
Number of rescues/BRP
70
42
22
22
ot
he
r
oi
nt
m
en
ts
Ap
p
nt
al
Jo
i
To
t
BR
Ps
in
JA
in
an
d
JA
on
ly
>2
0
BR
Ps
to
11
to
6
Number of rescues
1
10
5
2
12
11
5
20
7
4
3
2
12
1
80
70
60
50
40
30
20
10
0
Future Plans
• Must include a way to address serious competency/skills challenges.
• Compulsory test by “expert” could be BRP, to determine viability
rescue venture before accepting new rescue project.
• Pairing on BRP’s
• Restriction of number of ventures that BPR are allowed to accept
• Firm action against culprits found to abuse the rescue process, could
include litigation to claim back fees and damages
• Blacklist all that was found guilty
• Disciplinary review committee through peers review system
• Exploring the possibility of CIPC assisting unsophisticated affected
parties with funds to litigate against willfully malicious and grossly
negligent BRP’s
Education Framework to determine the skills set of a rescue practitioner
• Implementation of an Accreditation/Competency Framework
• Creditor education
• Creating awareness in the business fraternity
• The focus on the objective to save jobs must be a priority for the BRP
THANK YOU
CONTACT DETAILS:
Contact Details
Amanda Lotheringen
012 3941512
082 497 4605
[email protected]