Exploring the role of the business rescue practitioner in rescuing a financially distressed company

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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.

Keywords: Company, Financial Distress, Practitioner, Rescue, Sustainability, Liquidation

JEL Classification: G34, K20

Received: 24.03.2018

Accepted: 16.06.2018

Published online: 13.07.2018

How to cite this paper: Mpofu, K., Nwafor, A. O., & Selala, K. J. (2018). Exploring the role of the business rescue practitioner in rescuing a financially distressed company. Corporate Board: Role, Duties and Composition, 14(2), 20-26. https://doi.org/10.22495/cbv14i2art2