Business in financial distress? Your options, in order

First 48 hours: see the cash clearly

Every good decision downstream depends on one document: a 13-week cash flow forecast, week by week, receipts and payments, honest about which debtors actually pay when. It tells you how long the runway really is, which payments are survival-critical (payroll, key suppliers, statutory) and which can be negotiated, and whether the problem is a timing gap, a structural leak, or a failed model — three different problems with three different fixes. Boards that manage distress off a monthly P&L are flying on instruments that update too slowly to matter.

Option 1: The informal creditor workout

Before any formal process, the cheapest tool is a phone call made early: creditors who hear from you before a missed payment, with a forecast and a proposal, agree to standstills and revised terms far more often than owners expect — because your survival is usually worth more to them than your liquidation dividend. The workout’s currency is credibility: realistic proposals kept, information shared, no surprises. Its limit: it needs most major creditors to cooperate, and one aggressive enforcer can break it — which is when the formal moratorium of business rescue becomes relevant.

Options 2 and 3: Refinance, or raise

Distress that is really a structure problem — expensive short-term debt, a funding mismatch, cash locked in debtors or stock — is solved with finance, not process: bridging facilities for defined gaps, asset-backed and invoice finance that convert balance-sheet assets into working capital, consolidation of penalty-rate borrowings into termed debt. Where the business itself remains fundable — growing, differentiated, temporarily wounded — new equity or mezzanine can reset the balance sheet properly; investors do back good businesses with bad balance sheets, at prices that reflect the distress. The discipline both routes demand: refinancing a business whose model is broken only rents time at high interest.

Option 4: Sell as a going concern

The most under-used move on this list. A business with real customers, contracts and capability but an unfixable balance sheet is usually worth materially more sold than saved-in-name-or-liquidated — and buyers for such situations actively exist: competitors, consolidators, private equity, and management teams via buyout structures. A competitive process run properly — even on a compressed timeline — changes the price; a single desperate negotiation with the first interested party is how going concerns get bought for asset value. Caban’s sell-side desk runs these mandates, and our guide on sale timing covers the decision in full.

Options 5 and 6: Business rescue, then liquidation

Business rescue earns its considerable cost when a viable core needs the legal moratorium’s protection while a practitioner restructures around it — our full guide covers the process, the costs and the success-rate truth. Liquidation, the final option, is sometimes simply correct: when nothing viable remains, an orderly wind-down under a liquidator stops the losses, treats creditors lawfully, and lets the people involved start again — South African law is deliberately built to allow honest failure. Choosing it deliberately, early, with advice, is a legitimate board decision; drifting into it via a creditor’s application is not.

The directors’ duty that shapes all of this

Once a board has reason to believe the company meets the Companies Act’s financial distress test (unable to pay debts as due within six months, or insolvency likely within six months), it must act — commence rescue or formally notify shareholders and creditors why not — and continuing to incur debts the company cannot pay invites personal liability for reckless trading. In practice this means: document the assessment, take advice, decide deliberately. The duty is not a trap; it is the law’s way of forcing the early action that preserves value anyway.

Where Caban fits

Caban works the commercial side of every option above: the honest early assessment of which route preserves most value, refinancing and bridging structures, capital raises for wounded-but-viable businesses, going-concern sale mandates, and post-commencement finance where rescue is the road. The first conversation is often the highest-value hour — confidential, reviewed by a principal, answered within five working days.