Abstract
LL.M. (Commercial Law)
The Companies Act 71 of 2008 (hereinafter referred to as the Act) was passed by Parliament
on 19 November 2008 and assented to by the President on 8 April 2009. The Act came into
force on 1 May 2011 and contains the provisions regulating the new business rescue
proceedings that replace judicial management under the Companies Act 61 of 1973. However,
since the introduction of Chapter 6 of the Act, the courts South Africa still appear to be
finding their feet with regard to many of the Act’s provisions. In spite of this, the new
business rescue practice has become an important part of the South African corporate
framework. The outbreak of recent case law has started to shape the direction, which business
rescue, as interpreted by the Courts, is taking. An important debate among the courts is
whether the courts should rescue a business entity or liquidating the businesses assets in order
to settle claims against it. While a liquidation aims to divide the profit from the sale of assets
amongst creditors and to dissolve the company, business rescue legislation provides for a
restructuring of the financial structure of a distressed debtor to save the business as a going
concern and to assist the settlement of claims against the business in full. The business rescue
proceedings have been provided for by legislation in the Act, however, the result of the vast
recent court decisions show that the Act may not be relied upon unconditionally without
proper regard to the circumstances of each case. This research analyses the appropriateness of
business rescue as opposed to liquidation by specifically looking at the requirements for a
successful business rescue order. This research further analyses whether the decisions of the
courts in present case law are on the correct path when interpreting the business recuse
provisions in terms of the Act.