This is going to happen to someone reading this blog, in the next few weeks, while everyone is on holiday. It is inevitable.
A major debtor is going to put itself into business rescue (BR), and you are not going to be paid. The bigger the debtor, the longer he has been outstanding, and the easier it is to talk to him at present – the more likely it is for him to go into BR over Christmas.
Right now that debtor is hanging onto life by his finger nails, waiting for the holidays, when he can take care of a lot of statutory time while the wolves are sleeping. That is what planning for BR is all about.
But creditors should also plan. By this I mean that every company should have in place a BR plan, just as you have a fire escape plan, a business continuity plan, a flood plan, a backup plan, and so on. (Of course you have those other things – right?)
What do you do in the event you are sent a fax or email advising you that your largest debtor has been placed in BR? Worse, what do you do over Christmas when a fax lies unattended, or your email is being given a break? Does the security guard know what to do with service by the sheriff?
For many, the plan involves frantic phone calls, out of time, to an over worked BR practitioner (BRP) or to the directors of the company who are not answering their phones in January.
Take a step back. Take a breath. There are provisions in the Companies Act which require the BRP to act within very carefully defined parameters, particularly before the creditors have been asked to vote for the first time. Those voting parameters in the first instance, should be interrogated carefully by all creditors.
In particular, the coming holiday period should be monitored for opportunities where BRPs might take advantage of the general lethargy, to gain an unfair advantage.
Chief amongst early day abuses will be the requirements for all creditors to be notified, and invited to the first meeting. There are only a few days within which this must happen. If the BRP screws up, he is at enormous risk, personally. If you know he has screwed up, you could have a nice advantage. They do screw up, but without creditors noticing.
So what is your BR plan?
- Nominate someone within your organisation, today, to be “on duty” for the holiday period. He must have access to a recognised official method of acceptance of legal delivery, on all days, including Christmas and New Year.
- Notify any debtors acting suspiciously that if they are contemplating business rescue proceedings, that the method of delivery is as decided above. Send this by registered mail, or obtain a written confirmation of receipt. Under the proper circumstances, email, and even SMS is legal and binding. If they are being difficult, record a telephone conversation.
- Send a general circular to all your debtors advising them of your BR official’s details.
Suitegum offers this service, and someone will be on duty 24/7 through the holiday period with a watching brief for our Splinter clients. The fee is small, but well worth the price as cover for potential disaster while you enjoy your holiday.
Let me know on 061 410 2421 or drop me an email if you need more information.