A pre-assessment checklist to filing for business rescue in South Africa

Abstract

Business rescue is still in its infancy stage in South Africa, with the introduction of Chapter 6 of the Companies Act 71 in 2008 that took effect in mid-2011. To date the success rate has been dismal and value has been eroded as many companies opt to file for business rescue, but shouldn’t. The objective of this research is to determine glaring attributes that would require extensive consideration before filing for business rescue. These facets should be considered in the pre-assessment stage and should be given the due respect to ensure the organisation has a fighting chance at survival. Business rescue is becoming a tarnished industry within South Africa as a few business rescue practitioners are enriching themselves at the expense of the unexperienced creditors to this new piece of legislation that is designed to help facilitate a turnaround, whilst under the protection of the legal system. This in turn, will help to preserve, not only ailing businesses and their communal value, but the mere jobs of each individual within these distressed ventures. South Africa has struggled from a growth perspective for the past few years and with the help of legislation, and a thorough pre-assessment, ailing and distressed businesses may be saved.