Business rescue in practice : a comparative study

Abstract

South Africa is experiencing constrained economic growth with a domestic growth rate for 2017, of less than one percent. This has dictated a harsh environment for South African businesses which are the back bone of the economy, providing much needed jobs. Based on international best practice, South African legislation allows an opportunity for recovery in the form of business rescue as an alternative to liquidation of the business. Using qualitative, semi-structured interviews with an inductive approach a comparison was made between business rescue in South Africa and the parallel practice of voluntary administration in Australia. Since the inception of business rescue in South Africa, a relatively low success rate of 9.3 per cent has been achieved more especially compared to the 22 per cent success rate of voluntary administration in Australia. Upon interrogation of the subject matter it has been established that the practices are procedurally alike however, the fundamental differences relate to the quality of business rescue practitioners and the regulatory body associated with such practitioners. This study proposes that adjustments to the standards that endorse practitioners which will lead to an improvement in the success rate of business rescue in South Africa.