Freight Forwarders & Business Rescue

By |August 28th, 2015|Credit Law|0 Comments

Business Rescue has been introduced under the Companies Act, 2008 (“the Act”). By passing a simple resolution, a company may commence business rescue proceedings. One of the important consequences of doing so is that in terms of section 133 of the Act, there is a general moratorium on legal proceedings against the company. In other words, while the company is under business rescue, a creditor is prohibited from instituting legal action against the company to enforce the payment of a debt that would otherwise be due and payable by the company.  This article investigates what happens to goods in transit in a business rescue situation and sets out the steps that freight forwards should be taking to reduce the risks.

For companies that operate in the freight forwarding industry and/or that hold or convey goods for their customers, this poses significant risks, including the following:

the risk of demurrage, transport costs or warehousing costs for goods that are held by the freight forwarder at a time when the company is under business rescue; and
the possibility of not being able to enforce a suretyship or having the claim against the surety reduced in line with any approved business rescue plan (typically business rescue […]