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 • • • • • • • 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 • • • • • • • 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]