Business rescue practices in South Africa: An explorative view
Date
2018-06-20
Authors
Naidoo, T
Patel, A
Padia, N
Journal Title
Journal ISSN
Volume Title
Publisher
AOSIS (pty) Ltd
Abstract
Given the seemingly low rate of success of the current business rescue regime (at just
13.6% as at June 2015), this study sought to identify whether the current business rescue
regime in South Africa realises its intended objectives and why this meeting of objectives or
failure to do so may be the case. It focuses on practical issues and the investigation is
undertaken through interviews with business rescue practitioners who are the facilitators of
business rescue. The findings show that there is a lack of clarity in the definition of success
which may be cause for concern and that, despite its consistency with other jurisdictions, in
the views of practitioners, the success rate is expected to improve. The study finds that there
is a lack of prompt action when signs of financial distress are noted and a lack of funding for
companies in business rescue. The experience of the practitioner has a significant impact on
the success or failure of the rescue and may be one of the reasons for the current low rate of
success of the regime, while the specific qualifications of the practitioner play a smaller role.
The plan is imperative but there is often a lack of information and insufficient time allocated
to its preparation. Consistency of Court judgements also has a bearing on success of
business rescue, while consistency with provisions of other jurisdictions is not considered to
be important.
Description
Keywords
Business rescue, Companies Act, Rescue practice, Practioner, South Africa
Citation
Naidoo, T., Patel, A. & Padia, N., 2018, ‘Business rescue practices in South Africa: An explorative view’, Journal of Economic and Financial Sciences 11(1), a188. http://dx.doi. org/10.4102/jef.v11i1.188