Abstract:
Tension often arises when Chapter 6 business rescue practitioners (BRPs) are appointed by directors to
rescue their distressed businesses. Regulating by means of standard agency contracting becomes
irrelevant in the resulting multiple relationships. Looking through the agency lens, using analytic autoethnography
and compiling narratives, this paper explains the perceptions of what appear to be quasiagency
relationships and obtains a better understanding of these. The findings suggest that the apparent
principal-agent relationships suffer from asymmetries of goals, information access, informal power and
diverging perceptions of moral hazard, transaction costs and adverse selection. As a solution, contracting
has been shown to have limited value owing to outcome uncertainty and measurability. This is because the
tasks of the BRP are non-programmable and term-dependent. The findings provide filing directors,
shareholders, creditors, regulatory authorities and BRPs in this newly instituted regime, with enhanced
understanding of how the relationships manifest in practice and overcome the non-contractibility of the
newly formed relationships.
