SAMPLE ENGAGEMENT LETTER FOR BRPs

Transcription

1 Practice note # 2 SAMPLE ENGAGEMENT LETTER FOR BRPs Date: (DATE) The Directors (Client Name) Dear Sirs Business Rescue Proceedings Thank you for appointing BRP s Name ( BRP ) of Name of BRP s Company( BRP Company ) as the Business Rescue Practitioner for Client ( Client Name ) to facilitate the rehabilitation of the company as provided for in terms of Chapter 6 of the Companies Act 2008 ( Chapter 6 ). We look forward to working closely with you in the development and implementation of a Business Rescue Plan. 1. Purpose and Terms of Reference The purpose of this appointment is to oversee and supervise the company during Business Rescue Proceedings and to facilitate the rehabilitation of the company which is financially distressed. This appointment is governed by Chapter 6 which inter alia provides for 1.1. the temporary supervision of the company, and of the directors of its affairs, business and property; 1.2. a temporary moratorium on the rights of claimants against the company or in respect of property in its possession; and 1.3. 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 s continuing in existence on a solvent basis or, if it is not possible for the company to so 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. 2. Appointment of the Business Rescue Practitioner 1

2 ( BRP s Name ) was appointed the Joint Business Rescue Practitioner of the company, in terms of the resolution dated ( date ) to voluntarily commence business rescue proceedings and place the company under his supervision. The ( BRPs Name ) appointment as a Senior Business Rescue Practitioner was approved by the CIPC on the (.date). 3. Fees 3.1. In consideration for the BRP providing the Business Rescue services described by Chapter 6, the directors agree to compensate BRP Company at the hourly rate of R2, 000 including Value Added Tax (VAT) for the (BRP s Name) services Weekly advance payments will be made based on the agreed estimate of work to be done by the BRP Name. Invoices supported by timesheets will be submitted on a weekly basis 3.3. All fees herein shall be paid by the directors to BRP s Company by bank transfer at the following bank: Bank: Branch: Account Name: Branch code: Account Number: 3.4. The fees referred to herein shall be payable without deduction; set-off or withholding save as required by law, or in accordance with the written payment instructions of the BRP Name or BRP Company issued from time to time to the directors. If such payments hereto are subsequently outstanding on the due date, interest shall be calculated on such amount at the rate of 11 percent per annum, calculated from date the payment was due to the date of payment, both days inclusive All amounts used in this engagement letter are in ZAR currency. Fees are to be paid in ZAR currency. 4. Fees for Subsequent Advice 4.1. We raise debits (in respect of fees) from time to time and on an on-going basis and these are payable on presentation. Statements will be forwarded monthly and overdue amounts will 2

3 attract interest at the prime lending rate on overdraft as charged by the firm s bankers from time to time, plus 1% Any additional services required by the directors from the BRP Name or BRP Company herein not agreed inclusive of the fees payable, shall be negotiated by BRP Company and the directors and such services shall be subject to the extent of which and complexity thereof and such services shall be priced according to the market value related thereto. 5. Expenses 5.1 BRP Name or BRP Company may incur reasonable expenses from time to time in relation to the performance of its obligations herein agreed, including, but not limited to: Travel costs; Postage; Printing; and Telecommunication costs Professional indemnity cover 5.2 The directors agree to reimburse BRP Name or BRP Company for such expenses as reasonably incurred by it in discharging of its obligations herein upon presentation of supporting documentation evidencing the expenses incurred. It is agreed that no single expense item in excess of R5, (five thousand rand) shall be incurred by BRP Name or BRP Company without prior written approval from the directors. 5.3 The parties hereby agree that all legal, accounting and tax overheads or other expenses, incurred by specialist advisors in connection with any transaction in terms of the Agreement herein shall be solely for the account of Client name. 5.4 BRP Name or BRP Company shall obtain prior written approval from the directors before incurring any costs referred to in paragraphs 5.2 and 5.2 above. 6. Communications Written communications with you will be by mail, facsimile or and unless we hear from you to the contrary, these will be the means of communication whatever may be most appropriate at the time. We are not responsible for the lack of privacy in the case of facsimile or communications and the unauthorised reading of such communications. 3

4 7. Announcements 7.1. The directors agree that all announcements to be made in South Africa, documents published in South Africa or statements made with respect to any advice, in South Africa, including any oral or written questions from any member of the South African media, shall be made, or published in consultation with BRP Name or BRP Company The Companies further agrees that upon Closing of the Business Rescue Process, BRP Company may advertise that it has rendered services to the directors pursuant to this Agreement. This includes the use of any Logo in respect of the Business Rescue Process. 8. Disclaimer The Business Rescue Plan ( the Plan ) is formulated on information obtained from books and records recovered from the Company, the Directors, management and interviews with relevant persons and it should be noted: 8.1. Our investigations will be limited due to the time constraints placed on us by the Companies Act. There may be certain issues that require additional investigation for an absolute determination to be formed. Where appropriate, we will highlight these issues throughout the body of the Plan and to the extent necessary, have considered the possible impact of them when making our recommendations to creditors. It is normal for the Practitioner s report to creditors to not form conclusive views in relation to all areas of investigation. Should liquidators be appointed to the Company, the Liquidators will continue those investigations should there be a perceived benefit to creditors We will not carry out an audit of the Company documents, nor will we have adequate opportunity to verify any of the information given to us by the Company except where expressly stated The statements and opinions given in the Plan are given in good faith and in the belief that such statements and opinions are not false or misleading. Except where otherwise stated we reserve the right to alter any conclusions reached on the basis of any changes in, or additional to, information which may become available to us between the date of this Plan and the date of any subsequent meetings or reports Neither BRP Name or BRP Company, nor any member or employee thereof undertakes responsibility in any way whatsoever to any person in respect of any errors in this report arising from incorrect information provided to us In considering the options available to creditors and formulating their recommendations, the Practitioners have made the necessary forecasts with respect to asset realisations and the 4

5 quantum of total creditors. These forecasts and estimates may change as asset, realisations progress and claims are received by creditors. Whilst the forecasts and estimates are the result of the Practitioners best assessment in the circumstances, it should be noted that the ultimate deficiency and thus the distribution or outcome for creditors could differ from the information provided in the Plan. 9. Indemnification 9.1. The directors will indemnify and hold harmless BRP Name or BRP Company, its Associates, and its Employees (the Indemnified ) from and against any claims or proceedings commenced by third parties and all direct costs and expenses thereof directly arising from BRP Company s engagement herein, except that the directors undertaking to indemnify the Indemnified, contained herein will not apply with respect to any losses to the extent that such loss resulted from the negligence or wilful misconduct of the Indemnified provided that The directors are allowed the opportunity to defend such action If any claim is made or proceedings are instituted by any third party against an Indemnified, the Indemnified may seek, without prejudice, in respect to recovery of damages suffered thereto ( third-party claim ), such Indemnified shall give written notice to the directors, describing in reasonable detail the nature of the third-party claim within fifteen (15) days after receipt by the Indemnified notice of the third-party claim provided that The directors is allowed the opportunity to defend such action The foregoing indemnity shall be in addition to any rights BRP Name or BRP Company enjoys under common law or otherwise, including but not limited to any right of contribution and any other liability which the parties may have to BRP Name or BRP Company or its Associates or Employees Without prejudice to any claim the parties hereto may have against each other, no proceedings may be taken against any director, officer, employee, shareholder, controlling person or agent of the parties in respect of any claim arising This indemnity shall have the full force and effect so far as it is not prohibited under any applicable statute or regulations BRP Name or BRP Company will indemnify and hold harmless the directors its Associates, and its Employees (the Indemnified ) from and against any claims or proceedings commenced by third parties and all direct costs and expenses thereof directly arising from BRP Name or BRP Company s engagement herein, except that BRP Company s undertaking to indemnify the Indemnified, contained herein will not apply with respect to any losses to 5

6 the extent that such loss resulted from the negligence or wilful misconduct of the Indemnified The terms and conditions of paragraphs 8.1 to 8.6 shall therefore apply mutatis mutandis The parties hereto hereby agree that their rights and obligations under this agreement will survive the termination of this Agreement. 10. Termination This Engagement will end in terms of Section 132 (2) of Chapter 6 when (a) The court (b) (c) (i) Sets aside the resolution or order that began the Business Rescue proceedings (ii) Has converted the proceedings to liquidation proceedings The practitioner has filed with the Commission (CIPC) a notice of the termination of business rescue proceedings; or A business rescue plan has been (i) proposed and rejected in terms of Part D of Chapter 6, and no affected person has acted to extend the proceedings in any manner contemplated in section 153; or (ii) adopted in terms of Part D of this Chapter, and the practitioner has subsequently filed a notice of substantial implementation of that plan. 11. Completeness of Agreement 11.1 This Agreement constitutes the entire Agreement between the parties pursuant to the Engagement where there are no representations or warranties, expressed or implied, statutory or otherwise, guaranteed hereto between the parties other than as expressly set forth and referred to herein Any amendment to this Agreement shall be effective only if made in writing and signed by each party pursuant to the terms and conditions contained herein Due to any one or both parties failing to exercise any of their rights herein constituted, shall not constitute a waiver of such rights by such party. 12. Assignment 6

7 No party shall have the right to cede, delegate or assign its rights or obligations hereunder without the prior written consent of the other party provided pursuant to the terms and conditions herein. 13. Notices 13.1 BRP Name and BRP Company choose as their domicilium citandi et executandi the address set out below: 13.2 The directors of Client choose as its domicilium citandi et executandi the address set out below: 13.3 All notices, requests, demands and other communications relating hereto must be in writing and will be deemed to have been duly delivered if by hand, by facsimile or mailed postage prepaid to the domicilium citandi et executandi or to such other address as may be given by notice in writing to the parties, and will be deemed to have been received if delivered, when delivered, and if mailed fourteen (14) days after mailing thereof. 14. Applicable Law and Dispute Resolution 14.1 This Agreement shall be construed and enforced in accordance with the Laws governing The Republic of South Africa and the rights and obligations of the parties shall be governed by the same All disputes arising out of or in connection with the present contract shall be finally resolved by arbitration in accordance with the Rules of Arbitration of the Republic of South Africa by one or more arbitrators appointed in accordance with the said Rules. Venue for the arbitration shall be in Johannesburg. 15. Interpretation of Words Words importing the singular shall include the plural and vice-versa. Words importing the past tense shall include the present tense and vice-versa. Words importing persons shall include firms and corporations and vice-versa. Words importing the masculine shall include the feminine and vice-versa. 7

8 16. Signatories The signatories for each party hereto represent and warrant on behalf of their respective parties that they are duly authorised to sign this Agreement on behalf of the their respective parties. 17. Captions Captions in this Agreement are inserted only as a matter of reference and in no way define, limit or extend the scope or intent of this Agreement or any provision thereof After completing the work, we are entitled to keep all your papers and documents while there is money owing to us for our charges and expenses. In addition, we will keep your file of papers for you in storage for not less than 1 year. After that, storage is on the clear understanding that we have the right to destroy it after such period as we consider reasonable or to make a charge for storage if we ask you to collect your papers and you fail to do so. We will not of course destroy any documents such as Wills, Deeds and other securities, which you ask us in writing to hold in safe custody. No charge will be made to you for such storage unless prior notice in writing is given to you of a charge to be made from a future date which may be specified in that notice. Clients are warned that archive material would be vulnerable in the event of a disastrous fire or similar accident at our storage facility and we cannot accept liability either in contract or in delict in that event If we retrieve papers or documents from storage in relation to continuing or new instructions to act in connection with your affairs, we will not normally charge for such retrieval. However, we may make a charged based on time spent for producing stored papers or documents to you or another at your request. We may also charge for reading, correspondence or other work necessary to comply with your instructions Unless otherwise agreed, and subject to the application of then current hourly rates, these terms and conditions shall apply to any future instructions given by you to this firm Although your continuing instructions in this matter will amount to an acceptance of these terms and conditions, it may not be possible to us to start work on your behalf until one copy of them has been returned to us for us to keep on our file Value Added Tax ( VAT ) is, in terms of the Value Added Act, Act No. 89 of 1991, as amended, (the Act ) charged at the rate of 14% (fourteen per centum). Where we are representing a client based outside of the Republic of South Africa ( RSA ) VAT will be charged at the rate of 0% (naught per centum). Where we are representing a client based outside the RSA, but a client (or a representative of the client) is in the RSA at the time that we are consulting with them, then, VAT will be levied at the rate of 14% (fourteen per centum) as required by the Act. 8

9 Please sign this letter in acknowledgement that you are in agreement with the terms and conditions of the Engagement of BRP Name as Business Rescue Practitioner to Client Name. Yours faithfully BRP Director BRP Company I, ( Name ), duly authorised by Client, do herby agree to the Joint Engagement of BRP as Business Rescue Practitioner to Client on the above terms and conditions.. Name Dated.. Place: Director Client 9