Turnaround Management Association - Southern Africa
TThe Turnaround Management Association of Southern Africa (TMA-SA) is led by a group of dedicated industry professionals who work as volunteers for the association with the aim of improving the turn-around management industry across Southern Africa.
The TMA-SA is the local chapter of the global Turnaround Management Association and aims to serve its members by encouraging thought leadership, guiding legislative projects and helping members to equip themselves with the skills and knowledge necessary to offer holistic advice. This will allow members to offer a comprehensive turnaround strategy to their clients, helping these companies to become profitable again.
The concept of business rescue
Business rescue is undertaken when a company does not have sufficient income to meet its financial obligations for at least the next six months. If a company wants to initiate a business rescue, the board of the affected company must not have capital raising plans or alternatives in place.
The affected business may need a capital injection or a complete operational revamp. The business rescue process suspends creditors’ claims and allows the business to reposition itself provided it can get its creditors to agree to a business rescue plan. Employee rights are secured in a business rescue subject to the provision of the Labor Relations Act.
This process is designed to help these companies create new strategic and operational paradigms which will make them profitable again.
The process under Chapter 6 of the Companies Act
The board of the troubled company initiates the process and appoints the business rescue practitioner. Thereafter, the rescue practitioner advises the affected parties (creditors and holders of securities) that the process has commenced.
The business rescue practitioner (who is the responsible for the implementation of the business rescue plan) has 21 days to produce a rescue plan and have it approved by the majority of the creditors. Once this agreement is implemented and the business rescue process commences. Once the milestones of the business rescue plan have been met and the company returns to solvency, the business rescue process concludes and the daily operation of the business is returned to the board.
The Act also allows for affected parties can force a company to commence the rescue process by making a direct application to the court.
The consequences of business rescue
The purpose of the rescue process is to create the opportunity for the business to return to profitability and deal with the issues underlying its under-performance. Consequently, all litigation is suspended and certain contracts can be renegotiated under the supervision of the business rescue practitioner. It is important to note that labor contracts are not affected by the business rescue process. Under the provisions of Chapter 6, employee rights and the amounts due to them are protected.
How can business rescue be used to the benefit of the company employees, creditors, lenders and shareholders? This process is designed to give the company breathing space, granting enough time for the proprietors to find a solution to the underlying problems within the business. This solution must be more beneficial to the stakeholders than business liquidation. This may include any number of outcomes. Consequently, staff, creditors, bankers and suppliers should support this process. If the rescue is successful they should gain a more sustainable business model with better job security and more stable revenue streams. If the process fails, then the business will go into liquidation which is the worse case scenario and ultimately results in the disposal of assets and closure of the company. This means that on-balance business rescue is a reasonable and preferable approach to constrained profitability.
This is where the skills and expertise of an experienced business rescue practitioner come to the fore. Business rescue practitioners don’t just need to draw up an effective business rescue plan, they also need to get all parties to approve and support and commit to the process. This can only be done by skilled practitioners.
The TMA-SA is a recognized organisational body with a wealth of experienced and dedicated practitioners in its ranks. This means that it is the logical place to begin your search for a reputable rescue partner. TMA-SA also has a process to provide business rescue practitioners with a formal level of accreditation.
In addition, the resources and experience in the TMA-SA means that it offers its members the opportunity to grow their network and expand their knowledge of the industry, helping new members reach the highest ranks in the rescue world.
The key objectives of the TMA-SA include:
- to position itself as a discerning body for turnaround professionals and to ensure good governance practices within the industry;
- to take the reins when it come to the thought leadership process and provide a reference point for anyone seeking the assistance of credible turnaround management and business rescue professionals;
- to accredit a diverse range of highly skilled professionals who seek to differentiate their value proposition by becoming TMA-SA members and sharing their knowledge with other like-minded professionals;
- to add value to members by providing a platform for networking and skills development through peer learning, CPD accreditation as well as mentorship of young professionals who enter the industry; and
- to provide members with guidelines and best practice principles when it comes to business turnaround.
If you are a business rescue practitioner or interested in business turnarounds in general, join the TMA-SA today and experience the benefits of membership.