“Rescue Me, Accountant” – How to Save Clients from Themselves (and Liquidation)
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When clients start skipping supplier payments, juggling creditor calls, or asking whether they can “just stop paying VAT for a while,” you know what’s coming.
They’re in trouble. The kind of trouble that spirals quickly—unless someone steps in with a plan. And that someone is often you.
South Africa’s business rescue framework exists to give distressed companies a fighting chance. But it’s not just about legal proceedings or theoretical turnaround strategies. It’s about practical, urgent intervention—and accountants are central to making it work.
Why Business Rescue Matters—Now More Than Ever
Business rescue isn’t a get-out-of-jail-free card. It’s a structured legal process, provided for in Chapter 6 of the Companies Act, that aims to either:
✅ Help a business return to solvency OR
✅ Deliver a better return to creditors than liquidation would
In an economy under strain, where cash flow disruption and financing gaps are increasingly common, early identification of distress is critical. Business rescue is designed for proactive recovery, not last-minute damage control.
Yet many companies only consider it when they’re past the point of no return—because no one around them understood the warning signs or the rescue process. That’s where CIBA accountants can make a real difference.
Defining Financial Distress (and How to Spot It Early)
Financial distress is defined in the Companies Act as a state where:
A company is unlikely to pay all its debts as they become due in the next six months,OR
The company is likely to become factually insolvent (liabilities > assets) in that period.
Let’s translate that:
If your client’s current liabilities exceed cash flows, or they’re burning through reserves and edging towards negative equity, they’re in distress. And if directors are aware of this but fail to act, they may face personal liability.
That makes your input essential. Not just to alert them, but to help evaluate options—and build a viable path forward if rescue is on the table.
Your Role in the Rescue Journey: From Crisis to Recovery
Let’s break it down by phase:
1. Before Business Rescue Is Filed (aka “The Danger Zone”)
This is where most of the heavy lifting happens. The business is under pressure but hasn’t formally filed for rescue. As the accountant, your role includes:
Updating management accounts (from the date of the last AFS)
Running financial diagnostics using tools like:
Altman Z-score: an objective distress prediction model
Leverage analysis: assessing encumbered/unencumbered assets vs secured debt
Section 4 solvency & liquidity test (Companies Act)
Stress testing cash flows to assess short-term survivability
Ensuring SARS compliance, since post-commencement tax returns take priority over many other claims
You’re the strategist, the triage team, and often the translator—turning numbers into decisions.
2. Planning the Rescue (Days 1–25)
Once a business rescue practitioner (BRP) is appointed, the company enters a tightly regulated phase. Within 25 business days, the BRP must present a business rescue plan to creditors and stakeholders.
Your role? Help shape that plan with credible, comprehensive financial insight.
That means:
Preparing financials as at the date of rescue
Modelling different recovery scenarios (including dividends under rescue vs liquidation)
Supporting stakeholder engagement by presenting clear, realistic financial outcomes
Projecting the next three years of operations and finances—based on assumptions you help define
The plan will only succeed if stakeholders believe it’s better than liquidation. And that conviction rests on your numbers.
3. Implementation and Monitoring
Once the plan is adopted (by majority vote of creditors), it becomes binding—even for those who opposed it. The BRP leads implementation, but ongoing financial reporting, analysis, and compliance still fall largely to you.
You’ll:
Monitor actual vs forecasted performance
Assist with compliance tracking (especially for conditions attached to the plan)
Support the company’s transition back to operational and financial health
You’re not just closing books, you’re guiding recovery.
Understanding the Hierarchy of Claims (and Where You Fit In)
Knowing who gets paid, and when, is crucial. The ranking of claims during business rescue is:
Secured pre-commencement creditors (limited to asset value)
Secured post-commencement creditors
BRP fees and professional costs
Employee wages earned during rescue
Unsecured post-commencement creditors
Unsecured pre-commencement creditors, including:
SARS and statutory bodies
Employee wages owed before filing
General trade creditors
Where do you fit in? If you’re doing work after the company enters rescue, you may be a post-commencement creditor—with a higher priority than pre-rescue engagements. But timing and documentation are key.
The Legal Backbone: Why You Should Care About the Act
The business rescue process isn’t a free-for-all. It’s tightly legislated. Here are a few sections worth keeping on your radar:
Section 128 – Definitions of financial distress and business rescue
Section 129 – When and how directors must act
Section 140 – Powers and responsibilities of the BRP
Section 150 – Contents and structure of a business rescue plan
Section 152 – Adoption and implementation of the plan
Section 153 – What happens if a plan is rejected
Understanding these sections doesn’t just make you more effective—it positions you as a trusted advisor who can guide clients through the legal fog with confidence.
Why This Makes You More Valuable
Business rescue is more than a crisis procedure. It’s an opportunity—for your client, and for your practice.
✅ You gain a new billable service offering
✅ You differentiate your expertise in a crowded market
✅ You help clients stay compliant, avoid liquidation, and protect jobs
✅ You advise directors on legal duties and practical steps—often before lawyers are involved
And when you do it right, you become the kind of accountant people don’t just need when SARS calls—they need you when their business survival is on the line.
Be Proactive, Not Reactive
Don’t wait for the letter of liquidation or the panicked phone call. Brush up on business rescue legislation, build your financial analysis toolkit, and start asking hard questions early.
The earlier you act, the more options you (and your client) have.
Because in business rescue, timing isn’t everything, it’s the only thing.
Join CIBA for an Exciting CPD on Business Rescue Legislation, Processes and Procedures here.
⚠️ When Business Goes South, Will Your Clients Turn to You or Run for Cover?
Business Rescue Legislation, Processes and Procedures
📅 11 April 2025 | 🕝 14:30 | ⏳ 2 Hours | 🎓 3 CPD Units | Live Event
Most accountants don’t think about business rescue—until a client’s company is on the brink. Then suddenly, you’re in the hot seat.
This session is your crisis playbook. Whether you're in practice or commerce, you’ll learn how to guide clients (or your own company) through business rescue—without drowning in legalese or risking personal liability.
Why You Should Be in This Room:
✅ Know what the law actually says—and what it means for you
✅ Get the accountant’s role clear—before, during, and after the rescue
✅ Avoid the #1 mistake accountants make: showing up too late
✅ Walk away with the reporting templates, timelines, and red flags you need to act fast
What You’ll Learn:
🔹 What business rescue really means (Hint: It’s more than just legal paperwork)
🔹 The step-by-step process—from early warning signs to recovery plans
🔹 Your exact responsibilities as the accountant (no fluff, just action)
🔹 How to stay compliant and protect yourself and your client
🔹 Real-world tips from a certified business rescue practitioner who’s been on the ground
🎙️ Presented by Div de Villiers
With 35+ years in development finance, and real-life business rescue experience for owner-managed businesses, Div knows what works—and what doesn’t—when it’s time to turn the ship around.
👉 Don't get caught off guard. Your client’s survival—and your reputation—might depend on this.
🔗 Register here now and be the expert they call when it counts.
