Group five: new chair to the rescue
GROUP FIVE: INDEPENDENT OVERSEER OF CREDITORS COMMITTEE A FIRST
Independent overseer of creditors committee a first.
Laher says business rescue should not be seen as just a glorified liquidation.
Haroon Laher of law firm Fasken, who is the independent chairperson of Group Five’s committee of creditors in the company’s business rescue process, is helping to forge a new path for business rescues in South Africa.
Laher is the first independent chairperson of a committee of creditors of a company in business rescue in SA and is passionate about maturing and growing the business rescue regime.
“We have an opportunity and if we do not grow this restructuring philosophy in this country, we are going to lose this opportunity – just like we lost the old judicial management regime which sat and gathered dust in the statute books with [only] six judicial managements since 1926,” he said.
Laher said creditors come to business rescue meetings or engagements thinking it is just another glorified liquidation.
“That is where we need to make the difference and create a process filled with integrity and transparency so creditors can see this is not just a glorified liquidation. Otherwise, business rescue is going to be doomed,” he said.
Laher said his appointment as the independent chairperson of the creditor’s committee in Group Five’s business rescue was almost like a “test case” because creditors engaged with only a single objective: how many cents in the rand will they receive.
Laher stressed this cannot be the only objective of a business rescue.
Bigger picture
He said the independent chairperson’s role is to consider the business rescue in its entirety, including the interests of all stakeholders and all issues, and balance them to come up with the best and most efficient outcome.
With Group Five, for example, did they simply cancel the contracts or retain them?
Or do they tell the secured creditors this is the end of Group Five and they end up losing millions with further performance bond guarantees at Lombards Insurance being called up or do they continue with the contracts and minimise that risk and loss?
Laher said answering these questions involved a balancing of a right and interest because if they did not continue with these contracts, the “hole” will have got deeper. Lombards will have been swallowed and some of the banks will have taken big hits.
“I have no doubt that if the creditors stood on their own and not been taken into this process with an independent person who looks at things holistically, creditors would have been up in arms.”
Laher admits it took time to tell creditors there is a bigger picture in this business rescue.
Creditors in Group Five in September voted overwhelmingly in favour of the business rescue plan for the listed entity and Group Five Construction.
In terms of that plan, Group Five’s listing on the JSE will be terminated and the company wound up but between 3 000 and 3 500 jobs will be saved through the restructuring.