Regulation and control of business-rescue practitioners : is there a suitable legal framework

• Jurisdiction: South Africa
• Author: P.J. Veldhuizen
• DOI: 10.10520/EJC181953
• Published date: 01 December 2015
• Date: 01 December 2015
• Pages: 24-30
• Published By: Siber Ink

24 © SIBER INK

Regulation and Control of

Business-Rescue Practitioners

IS THERE A SUITABLE LEGAL FRAMEWORK?

P J VELDHUIZEN1

ABSTRACT

Business Rescue was introduced by Chapter 6 of the Companies Act 71 of

2008. The concept is novel to South African Law. It seeks to emulate inter-

national best practice by providing a way for companies experiencing finan-

cial difficulties to avoid immediate liquidation by filing for interim protection

against action by affected parties. The business-rescue practitioner assumes

the overall control of the company and establishes whether a rescue can be

effected or a better return to creditors can be effected rather than the return

to be achieved on immediate liquidation.

This article seeks to discuss the process in broad terms, and the regulation,

if any, of the business-rescue practitioner which is integral to the legitimacy

of the process.

Introduction

Economic bubbles, and the financial crises that invariably follow them, are

nothing new. The most often referred to bubble is that of Tulip Mania in

the Netherlands in the 17th century.

Studies of a conspectus of literature on bubbles and the resultant crises

following thereafter reveal that the common thread appears to be attribut-

able to a spiral of greed and over-optimism. In fact, Kansas2 describes the

2008 recession as a ‘…scenario in which Wall Street practically destroyed

itself in an orgy of delusion and greed…’ and it is evident that the 2008

financial crisis and the concomitant recession that followed was a culmina-

tion of several financial failures dating back to, at least, the late eighties.

Public manifestations of these financial failures have been, to name but a

few:

• the 1987 Stock Market Crash;

• the Savings and Loans disaster in the early 1990s;

• the cataclysmic failure of Long Term Capital Management in 1998;

• the Asian crisis, in particular the collapse of the Thai Baht;

1

BProc, LLM, MBA Adv Corp Law & Sec. Member of the Companies Tribunal of

South Africa

2

D Kansas The End of Wall Street as We Know It 2009 Harper Collins, New York.