Summarise and paraphrase, include the references in the brackets:

Question

27.6.1 Content of plan
The plan must consist of three parts. Part A must set out
the background; Part B must set out the proposals; and
Part C must provide an explanation of any assumptions and
conditions (s 150(2)). The prescribed minimum content of
each of these parts is listed in s 150(2) as follows:
The background in Part A must include at least
a complete list of all the company’s material assets,
indicating those held as creditors’ security when the
business rescue proceedings began;
a complete list of company creditors when the
business rescue proceedings began, indicating which
creditors would qualify as secured, statutory preferent
and concurrent under insolvency law and which
creditors have proved their claims;
the probable dividend that creditors would receive in
their specific classes if the company were to be placed
in liquidation;
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a complete list of the holders of the company’s issued
securities;
a copy of the written agreement about the
practitioner’s remuneration; and •
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a statement whether the plan includes a proposal
made informally by a company creditor.
The proposals in Part B of the plan must include at least
the nature and duration of any moratorium for which
the plan makes provision;
the extent to which the company is to be released
from the payment of its debts, and the extent to
which any debt is proposed to be converted to equity
in the company or another company;
the ongoing role of the company, and the treatment of
any existing agreements;
the company property that is to be available to pay
creditors’ claims under the plan;
the order of preference in which the property proceeds
will be applied to pay creditors if the plan is adopted;
the benefits of adopting the plan as opposed to the
benefits that creditors would receive if the company
were to be placed in liquidation; and
the effect that the plan will have on the holders of
each class of the company’s issued securities.
And the assumptions and conditions in Part C of the plan
must include at least
a statement of the conditions that must be satisfied, if
any, for the plan to come into operation and be fully
implemented;
any effect that the plan contemplates on the number
of employees and their terms of employment;
the circumstances in which the plan will end; and
a projected balance sheet for the company as well as
a statement of income and expenses for the ensuing
three years, prepared on the assumption that the
proposed plan is adopted.
The material assumptions on which the projections are
based must be set out, and alternative projections based on
varying assumptions may be included (s 150(3)). Yet a cash
A, Smith. flow projection is apparently not required. The practitioner
must certify at the end of the plan that the actual
information provided appears to be accurate, complete and
up to date and that projections are good-faith estimations
based on the facts and assumptions set out in the
statement (s 150(4)).
Although s 150(2) provides that each part of the plan
must contain ‘at least’ the listed content, it is obvious from
the use of phrases such as ‘the extent to which’ and ‘if any’
in s 150(2) that not all of these elements will feature as a
component of each plan. In Commissioner, South African
Revenue Service v Beginsel NO & others 2013 (1) SA 307
(WCC) 317), Fourie J explained:
‘A perusal of s 150(2) of the Act shows that the legislature has prescribed
the content of a proposed business rescue plan in general terms. The
content can, by its very nature, not be exactly and precisely circumscribed
since it would differ from case to case, depending on the peculiar
circumstances in which the distressed company finds itself. It follows, in
my view, that upon a proper construction of s 150(2), substantial
compliance with the requirements of the section will suffice. This would, in
my view, mean that, where sufficient information, along the lines
envisaged by s 150(2), has been provided to enable interested parties to
take an informed decision in considering whether a proposed business
rescue plan should be adopted or rejected, there would have been
substantial compliance.’
In addition to s 150(2), which sets out the prescribed
content of a plan, s 154(1) provides that a business rescue plan may provide that a creditor who
has acceded to a discharge of a debt due by the company
will lose the right to enforce that debt if the plan is
implemented according to its terms. The link between these
two provisions, s 154(1) being the permissive one, was
confirmed in Van Zyl v Auto Commodities (Pty) Ltd 2021 (5)
SA 171 (SCA) 180–1.
We take a closer look at some elements of the plan:•
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Details about the creditors, any security they hold,
and their classification and likely dividend in
liquidation, all forming part of the background, are
relevant to determining whether business rescue will
yield a better result than liquidation (the so-called
‘liquidation comparator’). The requirement to include
information about security held for claims has been
relied on in interpreting s 134 on property rights (see
26.2). But the plan need not follow the statutory
preferences of ss 96 to 102 of the Insolvency Act
(Commissioner, South African Revenue Service v
Beginsel NO & others (supra) 314). The only
preferences provided for in Chapter 6 are those in
respect of post-commencement financing, the ranking
of which is comprehensively set out in s 135, and the
pre-commencement claims of employees. The ranking
and order of preference of all other claims depend on
the proposals in part B of the plan (cf Commissioner,
South African Revenue Service v Beginsel NO & others
(supra) 318 discussing the claims in that case).
The moratorium that may be provided for in a plan is
different from the automatic general moratorium
under s 133 (on which, see 26.1). This moratorium in
the plan is not necessarily a stay of legal proceedings
but might comprise a repayment holiday. It will also
take effect only when the plan has been adopted and
might extend beyond the termination of the business
rescue proceedings.
Although s 150(2)(b)(ii) requires the plan to set out
the extent to which the company will be released from
its debts, this provision must be read in conjunction
with s 154(1), which sets out when a plan can provide
for a discharge (see 27.6.4(i)).

Answer 1

The business rescue plan is structured into three distinct sections as outlined in s 150 of the relevant legislation. Part A focuses on the background information. It must detail the company’s material assets, creditors, their classifications (secured, statutory preferent, and concurrent), the expected dividends in liquidation, holders of issued securities, practitioner remuneration agreements, and any informal proposals from creditors.

Part B outlines the proposals for the business rescue, including the nature and duration of any moratorium, the extent of debt relief and potential equity conversion, the company’s ongoing role, existing agreements, property available for creditor claims, the priority order for creditor payments, advantages of the plan over liquidation, and the plan's impact on security holders.

Part C contains assumptions and conditions necessary for the plan's implementation. This includes any required conditions for the plan to take effect, impacts on employment terms, circumstances under which the plan may terminate, a projected balance sheet and income statement for three years under the assumption the plan is adopted, and the material assumptions behind these projections. Notably, alternative projections can be included, but a cash flow projection is not mandated (s 150(3)). The practitioner must certify the accuracy and completeness of the information presented, affirming that projections are made in good faith (s 150(4)).

While s 150(2) prescribes a minimum content for the plan, it allows for flexibility based on the specific circumstances of the distressed company, with substantial compliance being sufficient. The connection between the contents of the plan and the provision for creditors’ rights upon the plan’s adoption is noted in s 154(1) and further discussed in legal cases for clarity on creditors' standing (Fourie J in Commissioner, South African Revenue Service v Beginsel NO & others 2013; Van Zyl v Auto Commodities (Pty) Ltd 2021).

Moreover, details regarding creditors, their security, and potential dividends are essential in assessing the comparative outcomes of business rescue versus liquidation. Moratorium provisions outlined in Part B are distinct from the automatic moratorium available under s 133 and will only commence upon the plan’s adoption (Commissioner, South African Revenue Service v Beginsel NO & others). The extent of debt relief is aligned with s 154(1)’s provisions on discharge capabilities.

In summary, the business rescue plan must comprehensively address the company's circumstances, proposals, and conditions for its implementation while ensuring that it adheres to legislative requirements for transparency and creditor relations (s 150; s 154).

References

• Commissioner, South African Revenue Service v Beginsel NO & others 2013 (1) SA 307 (WCC)
• Van Zyl v Auto Commodities (Pty) Ltd 2021 (5) SA 171 (SCA)