The supreme court of appeal in Oakdene Square Properties v Farm Bothasfontein (Kyalami) gave some useful guidance about what should be in a business rescue application:

  1. A party seeking business rescue must show that there is a reasonable prospect of the company being restored to existence on a solvent basis or being restructured to give a better return for creditors or shareholders instead of immediate liquidation.
  2. Reasonable prospects means there must be a prospect of achieving one of the two goals based on reasonable grounds.
  3. A reasonable prospect does not mean a probability of rescue and exact details of the plan need not be set out in the application.  That is for the business rescue practitioner to do.
  4. Solvent existence is not only commercial solvency (assets exceeding liabilities) but factual solvency (ability to pay a company’s debts on time).
  5. Reasonable opposition in good faith by major creditors will be a factor to be considered in deciding whether there is a real prospect of business rescue succeeding.
  6. Alleged savings on the costs of winding-up does not justify business rescue rather than liquidation.
  7. The fact that a liquidator has powers to investigate doubtful conduct of directors and executives and suspicious transactions may be a good ground for ordering liquidation rather than rescue.