Exploring the commencement standard for business rescue

Abstract

Reorganisation is a relatively new development within insolvency law and is becoming increasingly popular across the world. It is complex, being both a second chance to some parties and great frustration to others. An understanding of these complexities is important to regulators, practitioners and academics. The choice to pursue proceedings is not always clear and is often clouded by overwhelming pressure, emotions and self-interest. The aim of this study is to provide a comprehensive and critical review of the standard that grants access to the commencement of proceedings and bridge the gap between the various perspectives, develop a cohesive understanding of the phenomena, upon which future studies can be based. The subject matter requires a broad approach to cover the various aspects at play. Therefore, the research is of a multidisciplinary nature and is explored through the incorporation of studies from business, law, finance, economics and entrepreneurship. The topic is diverse and absent of an underpinning theory. For South Africa, the topic is of a great interest as the reorganisation finds itself amidst an array of abuse and misunderstanding. Though South Africa is used as the main reference point, the study aims to highlight universally accepted principles for goal application. A framework is presented to assess the prospects of reorganisation success at commencement. This tool seeks to make the commencement decision fast and simple while giving conscious attention to the business principles and stakeholders. The framework offers a fresh perspective on how the commencement decision can be evaluated.