Abstract:
South African business rescue regime is governed by the Companies Act of 2008, that introduced a comprehensive framework under chapter six, aimed at the rehabilitation of financially distressed companies to avoid liquidation. The business rescue process provides a moratorium mechanism for companies to restructure and reverse the financial decline under the stewardship of a qualified independent practitioner described as business rescue practitioner (BRP). If the company business rescue restructure plan is approved and the rescue is successful, the company exits the business rescue. If the plan fails or is not approved liquidation becomes one of the available options. South African business rescue objectives entail the balancing of the interests of primary stakeholders (employees, creditors, and shareholders) through the restructuring and preserving the business, the employment and maximising the return for creditors. The aim of the study was to explore the role of stakeholders on business survival post business rescue and understand the enablers and inhibitors of stakeholder support during business rescue process. A qualitative study utilising semi-structured in-depth interviews was conducted with 21 participants, constituted by the primary stakeholders of the companies that achieved substantial completion and/or implementation of the business rescue plan and successfully exited business rescue, suppliers as well as industry role players. The study revealed that the enablers to business survival prospects post business rescue entail collaborative decision-making, effective stakeholder engagements, accountability for success, and solution-driven initiatives. The inhibitors were identified as stakeholder opposition and passiveness, conflicts regarding committing to the equitable allocation of resources, and stakeholder failure to navigate stakeholder dynamics in business restructuring. With regards to the timing of the involvement of stakeholders, the study indicated that the contributing factors to include effective planning in financial distress, aligning and balancing interests of stakeholders, and systematic implementation of the plan. These enablers and inhibitors have therefore assisted this study to understand the role of stakeholders on business survival and sustainability post business rescue, which fits squarely within the scope of the research undertaken.
