Abstract
The 2008 Companies Act introduced a new business rescue regime into South African Company law, bringing it into line with trends in developed countries, particularly the United States. Indeed, it appears that the United States Chapter 11 model was followed in this process, introducing the business rescue concept as a legal transplant. Corporate law is well suited to legislative borrowing, but there are important caveats to bear in mind when doing so. In particular: the context and legal culture of the origin country may differ from those of the destination country. South Africa’s commercial environment is different from that of the United States, problematizing a transplant of Chapter 11’s concepts. Post-commencement finance will be used as a micro-study of this broader phenomenon, and this topic will be investigated with comparative reference to the United States position. It will be argued that an essential difference between the two procedures is the lack of legislatively mandated court oversight in South Africa. This impacts on the interests of creditors, as well as the availability of fresh finance. The result is problems in the implementation of the post-commencement finance provisions, which threaten the viability of this particular legal transplant.
Highlights
"The law, it seems, is an eager and experienced traveler",1 and in the case of Chapter 6 of the South African Companies Act[2] ("the Act" or "the South African Act") it would appear that United States bankruptcy law has made its way to our shores
Post-commencement finance will be used as a micro-study of this broader phenomenon, and this topic will be investigated with comparative reference to the position in the United States
This article will not analyse the substance of the decision in the Kariba case, but instead considers the court's reluctance to look to the United States' Chapter 11 and the jurisprudence thereunder when interpreting the provisions of the South African Act's Chapter 6
Summary
"The law, it seems, is an eager and experienced traveler",1 and in the case of Chapter 6 of the South African Companies Act[2] ("the Act" or "the South African Act") it would appear that United States bankruptcy law has made its way to our shores. In Part Four the approach taken by the Supreme Court of Appeal in Kariba will serve as a point of departure to comment briefly on the debate surrounding so-called legal transplants and how these manifest in the context of corporate law in general and in the context of insolvency law and post-commencement finance during business rescue proceedings. The comparative analysis illustrates that a greater degree of oversight by the courts, perhaps unexpectedly, renders the United States system flexible and practical, as will be argued in the conclusion in Part Five
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