SANYATI, the black-empowered engineering and construction company, has applied for the termination of its business rescue proceedings and the start of liquidation.

The company recently announced it was facing a liquidity crunch due to the government's inability to pay it on time. It asked the JSE in June to suspend trading in its shares temporarily as it tried to secure funding, saying its operations had been materially affected by "significant" unpaid bills of up to R80m owed by certain government clients.

It then applied for bankruptcy protection under chapter six of the new Companies Act, which aims to create a debtor-friendly environment in which creditors can co-operate with a rescue practitioner to commit to a rescue plan for the company.

Several listed infrastructure companies have been affected recently by nonpayment by state departments and agencies.

Trevor Murgatroyd, the appointed Sanyati business rescue practitioner, said on Tuesday he believed there was no longer a reasonable prospect of rescue and that steps had to be taken to liquidate the business.

The decision was reached after meetings with Sanyati creditors, employees and employee representatives last month.

Mr Murgatroyd said it was clear that the current operation of the business was not sustainable without a substantial capital injection, and that in its present state Sanyati would continue to move to its eventual demise.

He added that the only reasonable prospect of rescuing the business was an overall restructuring that would include rationalising expenses, ring-fencing viable projects, disposing of parts of the business and some contracts, entering joint ventures in respect of other contracts and raising capital.

On Friday, President Jacob Zuma said at a Black Management Forum gala dinner that the government was mulling drastic measures that would push departments to pay small and medium-sized service providers within a month, to minimise the risk of these businesses failing because of late payments.

With Phakamisa Ndzamela