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Godknows Hofisi-Business Law
After my article of April 30, 2026, I was contacted by several readers asking me to explain the key documents required when placing a company under voluntary corporate rescue proceedings.
Corporate rescue
In terms of section 121(1)(b) of the Insolvency Act (Chapter 6:07) (the Insolvency Act), corporate rescue means proceedings to facilitate 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, business and property.
A temporary moratorium on the rights of claimants against the company or in respect of property in its possession and the development and implementation, if approved, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis or, if the company can’t continue in existence, results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company.
Voluntary corporate rescue proceedings through company resolution
According to section 122(1), the board of directors of a company may resolve that the company voluntarily begin corporate rescue proceedings and place the company under supervision, if the board has reasonable grounds to believe that:
The company is financially distressed and there appears to be a reasonable prospect of rescuing the company.
In terms of section 122(2), the resolution shall only have force or effect if it has been filed with the Master of the High Court and the Registrar of Companies.
Company resolution for voluntary corporate rescue proceedings
It is a requirement in terms of section 122 of the Insolvency Act for the directors of a company to pass a resolution placing a company under voluntary corporate rescue proceedings if they choose voluntary corporate rescue.
The resolution includes:
Date and place of meeting.
Preamble to the meeting or resolution.
The resolution itself to place the company under corporate rescue proceedings.
Reasons for placing the company under corporate rescue proceedings.
What led to financial distress.
The director or person appointed to represent the company including signing the necessary documents.
The appointed corporate rescue practitioner who is not disqualified in terms of section 131 of the Insolvency Act.
Waiver of bond of security if legally permissible, or leaving that to the Master to determine.
Notice of corporate rescue resolution
This is done in terms of section 122 of the Insolvency Act. In this case, the appointed company representative, usually a director, signs this before a commissioner of oaths to the effect that:
The company is financially distressed in terms of section 121 of the Insolvency Act.
It appears to be reasonably unlikely that the company will be able to pay all its debts as they become due and payable in the ensuing six (6) months.
The company has been placed under voluntary corporate rescue proceedings.
A registered corporate rescue practitioner has been appointed by the company.
The board resolved to waive the bond of security if legally permissible, otherwise the Master of the High Court will determine.
Company/Applicant’s sworn statement
This is a requirement in terms of section 122(3)(a) of the Insolvency Act. It is signed by the company’s representative, usually a director. It usually includes the following:
The representative is duly authorised in terms of the resolution passed by the directors and the resolution will be attached thereto.
Registration details of the company, including its certificate of incorporation.
The company carries on business and has employees. It is financially distressed as defined in sections 121 and 122 of the Insolvency Act. May refer to the company’s Statement of Affairs.
The value of total debts and total assets of the company.
The appointed corporate rescue practitioner and attach his/her sworn statement and consent to appointment and practising certificate.
A resolution was passed to place the company under voluntary corporate rescue proceedings.
There are prospects of rescuing the company.
Sworn statement by the corporate rescue practitioner
The corporate rescue practitioner will depose to a sworn statement to the effect that:
He/she is a registered insolvency practitioner and will include his/ her practising certificate.
He/she received an inquiry from the company for an appointment as a corporate rescue practitioner.
He/she accepts the appointment and is not disqualified in terms of section 131 of the Insolvency Act.
Consent to appointment as corporate rescue practitioner
The corporate rescue practitioner will sign a consent to appointment, which includes:
Name of company and registration number.
File number at the Master’s office.
Name, ID number, and contacts of the practitioner.
Confirmation of his/her consent to the appointment.
He/she is not disqualified.
Statement of Affairs of the company
This is a key requirement that should never be left out. This is completed as per the First Schedule to the Insolvency Act. I have previously written articles on the Statement of Affairs.
Key sections include the following:
Balance Sheet/Statement of Financial Position of the Company.
Immovable property
Movable property.
Outstanding claims, bills and other securities.
List of creditors.
Assets pledged as security.
Systems and documents.
Statement on causes of insolvency.
Conclusion
The above constitute the key documents for placing a company under voluntary corporate rescue proceedings in terms of section 122 of the Insolvency Act.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), ACCA (Business Valuations), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, a chartered accountant, insolvency practitioner, commercial arbitrator, registered tax accountant and advises on deals and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He sits on the Board of the Council of Estate Administrators in Zimbabwe. He writes in his personal capacity. He can be contacted on +263 772 246 900 or [email protected] or [email protected]. Visit www//:hofisilaw.com for more articles.
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