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

dc.contributor.authorDu Toit, Andria Cornelia
dc.contributor.authorPretorius, Marius
dc.contributor.authorRosslyn-Smith, Wesley John
dc.date.accessioned2020-07-16T13:58:58Z
dc.date.available2020-07-16T13:58:58Z
dc.date.issued2019-01
dc.description.abstractBACKGROUND: 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.departmentBusiness Managementen_ZA
dc.description.librarianpm2020en_ZA
dc.description.urihttps://sajesbm.co.zaen_ZA
dc.identifier.citationDu 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. https://doi.org/10.4102/sajesbm.v11i1.149.en_ZA
dc.identifier.issn2522-7343 (print)
dc.identifier.issn2071-3185 (online)
dc.identifier.other10.4102/sajesbm.v11i1.149
dc.identifier.urihttp://hdl.handle.net/2263/75323
dc.language.isoenen_ZA
dc.publisherAOSIS Open Journalsen_ZA
dc.rights© 2019. The Authors.Licensee: AOSIS. This work is licensed under the Creative Commons Attribution License.en_ZA
dc.subjectEntrepreneursen_ZA
dc.subjectFinancial distressen_ZA
dc.subjectLawen_ZA
dc.subjectInformation assymetryen_ZA
dc.subjectSmall, medium and micro-enterprises (SMMEs)en_ZA
dc.subjectBusiness rescue practitioner (BRP)en_ZA
dc.subjectSouth Africa (SA)en_ZA
dc.titleSmall, medium and micro-enterprises’ distress and factual evaluation of rescue feasibilityen_ZA
dc.typeArticleen_ZA

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