The receipt of the first R1,5bn of the R10,5bn allocated to SAA should, theoretically, allow the business rescue practitioners and the Department of Public Enterprises to start moving forward with the formulation of a new SAA. However, disputes between the DPE, the BRPs and unions on how the funding must be spent continue to hold back implementation of the business rescue plan.
Conflict over allocation
According to the Companies Act, the first R1,5bn must be allocated in a particular order, first by paying the business rescue costs, followed by the pre-commencement secured creditors and then payment to employees for their employment during business rescue. Secured post-commencement creditors are next in line followed by unsecured post-commencement creditors and then remuneration, reimbursement and expenses relating to employment prior to business rescue must be paid. However, the BRPs say they have been unable to disburse the R1,5bn, telling Travel News that the conditions that were stipulated by the DPE for how the funds should be spent are in contravention of both the Labour Relations Act and Chapter Six of the Companies Act.
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