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Business rescue is meant to end, either because a plan was rejected, the company must be liquidated, or because the plan has been substantially implemented and the business can breathe on its own. That last milestone, recorded by a notice under section 132(2)(c)(ii), is more than a box-tick. Filed too early, it strands creditors with promises on paper and no mechanism to enforce the outstanding steps.
Think of substantial implementation as a functional test: has the plan been carried far enough that the rescue regime no longer adds value? If the heavy lifting in the plan has happened – asset sales concluded, compromises paid as scheduled to date, security released where promised, third-party funding closed, key contracts novated – and what remains is ordinary course performance that management can handle without rescue's special protections, a BRP may be justified in filing. If, by contrast, material distributions are outstanding, conditions precedent are still open, approvals have not landed, or the plan's keystone transactions are incomplete, it is premature to switch off the rescue lights.
Why the fuss? Because filing the notice changes everyone's position. The section 133 moratorium falls away. The BRP's special powers and duties recede. Creditors who relied on the plan's enforcement inside rescue suddenly find themselves back in ordinary litigation – often with less leverage and higher cost. Courts have shown little patience for "premature closure"; where the heart of the plan is still in progress, "substantial implementation" is a misnomer.
For companies, the lesson is to sequence the plan so that the hard parts happen during rescue and are verifiable. For creditors, it's to monitor implementation against objective markers, and to challenge a closure notice where it would leave you holding an empty bag. Substantial should mean substantial – substance over label.
Worried a rescue is being closed too soon? We assess implementation against the plan, advise on objections, and, where necessary, seek appropriate relief to keep protections in place until the real work is done.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
