EXAMINERSHIPS AND SCHEMES OF ARRANGEMENT
The turnaround process as outlined in turnaround management, may benefit from formal legal procedures designed to assist in such circumstances:
The appointment of an Examiner under part IVA of the companies’ act will result in the protection by the court of the company from legal actions against it for a period of four to six months. During this period the Examiner will negotiate with stakeholders and present proposals to them which if approved are binding on all. For example, a reduction of the amounts due to suppliers or banks will be enforced on all such creditors if approved by the respective creditor meetings to be called by the Examiner and approved by court.
Similar provisions exist where a scheme of arrangement is proposed, but without the initial protection by the court from legal action against the company.
Our team has wide experience in dealing with such procedures and can offer guidance and support to distressed companies leading to their rescue.