Conservative judicial approaches to the business rescue procedure: can the new procedure succeed where judicial management failed?

Abstract

This research report seeks to interrogate whether some of the notable limitations which led to the dismal failure of the Judicial Management as a corporate rescue mechanism effectively remain subversive to the business rescue procedure which is intended to prevent the same experiences of the past. The research will thus be limited to the consideration of only those limitations which were problematic under Judicial Management and yet appear not to have been sufficiently addressed by Chapter six of the Companies Act 71 of 2008. It will be acknowledged that the business rescue procedure stands to be largely progressive. However, the bulk of this research is intended to show that the complicated nature of the business rescue provisions coupled with some drafting oversights on the part of the Legislature leaves the procedure vulnerable to the same issues which affected its predecessor. Specifically, the imprecise and complicated nature of sections 131(4) and 133(1) of the 2008 Companies Act makes the procedure vulnerable to judicial conservatism, the same challenge which was most contributory to the failure of Judicial Management. This has in turn resulted in several inconsistent decisions in the interpretation of these provisions which causes unnecessary uncertainties deleterious to the intended purpose for which the business rescue mechanism was enacted.