Business Rescue: Are Your Suretyships Enforceable? A R5.5m Lesson for Directors and Creditors

KVV Inc Attorneys

Published on: 04/03/2025

When a company in business rescue can't pay its debts, creditors often lose out. However, personal suretyships from directors offer a lifeline. Even if a business rescue plan releases the company from its debt, directors may still be liable under their suretyship. A recent case confirmed this, highlighting that a surety's obligation remains unless the rescue plan specifically addresses it. Creditors should ensure suretyships cover all business failure scenarios and rescue plans protect their rights against sureties. Directors should carefully consider the implications of personal suretyships and manage their potential liability during business rescue.