Chapter 6 of the New Companies Act deals with Business Rescue, a process which means facilitating the rehabilitation of a company that is financially distressed by providing for the temporary supervision of the company and of the management of its affairs.

During these proceedings the affairs of the company are under the control of the appointed Business Rescue Practitioner. The Practitioner is required to prepare a business rescue plan in accordance with s150. The plan then needs to be approved by the creditors. In some instances the business rescue plan will not receive the support required for approval from creditors. This, however, is not the end of the business rescue plan.

In terms of s153(1)(b)(ii), any affected person or a combination of them may, on the request of the practitioner, make a “binding offer” to purchase the voting interests of one or more persons who opposed the adoption of the business plan, at a value independently and expertly determined, to be a fair and reasonable estimate of the return to that person, or those persons, if the company were to be liquidated. This has previously been described as a last-gasp attempt to secure the approval of the business rescue plan.

The focus of this article is of course the “binding offer,” a phrase which the Act doesn’t define. An agreement, in its everyday meaning, consists of an offer by an indication of one party (the offeror) to another (the offeree) of the offeror’s willingness to enter into a contract on certain terms.