Companies and Close Corporations who fails to pass the insolvency and Liquidity test, or are temporally financial distressed, or who’s liabilities exceed its assets (insolvent) can be either placed in Business Rescue under the supervision of a Business Rescue Practitioner, or be Liquidated depending upon the circumstances.
In the event of Business Rescue a moratorium is created which prohibit creditors to pursue with legal action and entitle the Company or Close Corporation some breathing space to get its finance in order with the assistance of a Business Rescue Practitioner, and within the ambit of the Companies Act.
Liquidation means that the Company or Close Corporation will cease to exist and a liquidator is appointed to distribute the assets and liabilities.
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