Small, medium and micro-enterprises’ distress and factual evaluation of rescue feasibility

Show simple item record Du Toit, A.C. (Andria) Pretorius, Marius Rosslyn-Smith, Wesley John 2020-07-16T13:58:58Z 2020-07-16T13:58:58Z 2019-01
dc.description.abstract BACKGROUND: Entrepreneurs often face distress in their businesses; as one way to address it, they can file for business rescue. The Companies Act 71 of 2008 requires the appointed business rescue practitioner (BRP) to place before the court facts proving ‘reasonable prospect’. This often seems determined mainly by the subjective opinion of practitioners, who rely on their experience and knowledge in rescue and business management. This appears to be in direct contrast to the requirements for factual evidence set out by several court judgements. There are many questions surrounding the determination of reasonable prospect, as there seems to be no benchmark for entrepreneurs and BRPs to work towards or a prescribed process to be followed. AIM: This article investigates different methods of factually determining reasonable prospect and guiding the decision-making process during the pre-filing and initial stages of the rescue of small, medium and micro-enterprises (SMMEs). SETTING: The study was conducted using South African case law and financial models relevant to SMMEs in South Africa. METHODS: Qualitative analysis of existing financial models and case law to better understand how BRPs determine initial reasonable prospect when working with SMMEs. RESULTS: The research report methods of determining financial distress and decline within the relevant case law. CONCLUSION: Reasonable prospect relies heavily on experience and opinion. Factually proving reasonable prospect remains problematic because of information asymmetry and the lack of data integrity. Affected parties (including entrepreneurs) could benefit from the insights obtained in this study. Identifying methods that could assist with the factual determination of reasonable prospect could contribute to entrepreneurial education, as well as address the current conflict that surrounds the subject. en_ZA
dc.description.department Business Management en_ZA
dc.description.librarian pm2020 en_ZA
dc.description.uri en_ZA
dc.identifier.citation Du Toit, A.C., Pretorius, M. & Rosslyn-Smith, W., 2019, ‘Small, medium and micro-enterprises’ distress and factual evaluation of rescue feasibility’, Southern African Journal of Entrepreneurship and Small Business Management 11(1), a149. en_ZA
dc.identifier.issn 2522-7343 (print)
dc.identifier.issn 2071-3185 (online)
dc.identifier.other 10.4102/sajesbm.v11i1.149
dc.language.iso en en_ZA
dc.publisher AOSIS Open Journals en_ZA
dc.rights © 2019. The Authors.Licensee: AOSIS. This work is licensed under the Creative Commons Attribution License. en_ZA
dc.subject Entrepreneurs en_ZA
dc.subject Financial distress en_ZA
dc.subject Law en_ZA
dc.subject Information assymetry en_ZA
dc.subject Small, medium and micro-enterprises (SMMEs) en_ZA
dc.subject Business rescue practitioner (BRP) en_ZA
dc.subject South Africa (SA) en_ZA
dc.title Small, medium and micro-enterprises’ distress and factual evaluation of rescue feasibility en_ZA
dc.type Article en_ZA

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