SOUTH AFRICA’S LARGEST PRO BONO INITIATIVE

PRO BONO INITIATIVE TO SUPPORT DISTRESSED BUSINESSES

The National State of Disaster was declared by President Ramaphosa on 15 March 2020. The COBRA (COvid Business Rescue Assistance) Initiative was conceptualised and initiated by IQbusiness, Schindlers Attorneys and Engaged Business Turnaround and the COBRA Consortium was formed on the same day, 19 March 2020 . On 23 March 2020, the National Lockdown was announced, to enforce a nation-wide lockdown for an initial period of 21 days. The COBRA Web site and Webinar programme went live on the same day as the announcement of the National Lockdown, 23 March 2020. COBRA was established as a social enterprise (NPO) with a War Room as a pro-bono service to South African businesses in distress to co-ordinate bank, government and stakeholder support through a structured business rescue process.

The COBRA Initiative was conceived with a view to creating an ecosystem where extensive legal, accounting, technology and business-turnaround expertise and related support services are made available to assist businesses in financial, legal and operational distress. Trading conditions for a wide range of businesses have deteriorated rapidly as a result of the global health crisis compounding the economic crisis that has been developing in South Africa over the past 5 years.

One of the ways COBRA assists is in doing everything possible to avoid a formal business rescue in terms of the Companies Act, by engaging creditors and mediating payment arrangements within the COBRA ecosystem. The goal is to keep the debtor and creditors liquid and, in so doing, to maintain the trust enjoyed by long time business relationships. This is achieved by the intervention of an impartial COBRA mediator, who will deal with creditors by encouraging them to enter into the COBRA ecosystem alongside the distressed business. COBRA has also aligned professional partners who have agreed to provide services that may be required for businesses in distress on a pro-bono basis, subject to the company qualifying in terms of its means. The pro-bono ‘means test’ has been designed by utilising the benefit of hindsight. If, ultimately, but for professional fees, the business can be salvaged, the matter will automatically qualify as pro bono and professional fees will be reduced or written-off entirely, by our partners, to ensure a successful rescue.

The services provided are in relation to:

  • the BR process itself;
  • the full suite of legal and accounting services; and
  • the creation and implementation of a BR plan, utilising the complete turnaround skills set of the COBRA consortium and its associates.
  • What COBRA provides on a pro bono basis, regardless of whether a business qualifies in terms of the means test, is the following:

  • Legal advice in relation to entering the BR process.
  • The drafting and lodgement of CIPC documentation in the event a BR becoming necessary.
  • Constant engagement with business owners and management via daily webinars.
  • Private Zoom meetings for professional strategic, HR, accounting and legal guidance.
  • Assistance in applying for benefits under the various relief funds.
  • The covering of the costs of a High Court application converting a failed BR into a liquidation, normally in the region of R30k – R50k.
  • The nett effect of the above is that, if a business cannot be salvaged, the entire process of trying to salvage the business, and the subsequent placing of the company into liquidation, will come at no cost to the shareholders/directors.