Abstract
The emphasis on corporate sustainability as against liquidation in the South African Companies Act 71 of 2008 creates an important figure in the person of the business rescue practitioner. The practitioner in that capacity supplants the board and is insulated from the relevant elements of shareholder control in the discharge of the task of rescuing the financially distressed company. The article interrogates, through doctrinal approach, the efficacy of the statutory provisions relating to the role of the business rescue practitioner in the business rescue process and argues against the disqualification of juristic persons from appointment as business rescue practitioners. While respecting the subjective decision of the practitioner in the preparation of the rescue plan, the paper considers that such subjective decision should withstand some level of objective assessment to enjoy credibility, just as the practitioner should conform to a high level of judicial scrutiny as an officer of the court to be absolved from any liability arising from a breach of duty.
Highlights
The principal companies’ regulatory instrument in South Africa, in the realization of the importance of the corporate entities to the social and economic development of the nation, presently lays emphasis on corporate sustainability rather than liquidation
That objective is to be attained through the process of a business rescue plan which is anchored by the business rescue practitioner
The observation in the United Kingdom by Cork Committee that the achievement of an efficient and reliable insolvency system relies upon its administrators and that if the administrators do not have the respect and confidence of the courts, the creditors, the shareholders and the general public, the insolvency system would fall into disrepute and disuse[8], applies in defining the role of the business rescue practitioner in rescuing a financially distressed company in South Africa
Summary
The principal companies’ regulatory instrument in South Africa, in the realization of the importance of the corporate entities to the social and economic development of the nation, presently lays emphasis on corporate sustainability rather than liquidation. The observation in the United Kingdom by Cork Committee that the achievement of an efficient and reliable insolvency system relies upon its administrators and that if the administrators do not have the respect and confidence of the courts, the creditors, the shareholders and the general public, the insolvency system would fall into disrepute and disuse[8], applies in defining the role of the business rescue practitioner in rescuing a financially distressed company in South Africa. The practitioner, appointed, supplants the board and enjoys the status of an officer of the court reporting only to the court in the discharge of the vested responsibilities[9]. The assumption of the role of the board, seemingly by an outsider, demands some close statutory monitoring to ensure that the business rescue practitioner remains the solution and not add to the problem that led the company into financial distress. This article focuses on those statutory measures which are in place to ensure that the objective of business rescue through the instrumentality of the business rescue practitioner is attained with the aim of ascertaining the efficacy of those provisions, and where necessary, recommending modifications as would enhance the realization of the stated objective
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