There have been a lot of
statistical reports the past couple of months on the success rate of the
business rescue process, its shortcomings and its abuse. With South Africa still in its infant
phase of business rescue, it is time to look at different aspects of the
process in order to establish the actual progress business rescue has ensured.
When business rescue commenced on
the 1st of May 2011 no business rescue practitioners were licensed
by the Companies and Intellectual Property Commission (CIPC), being the office
tasked with such licensing as well as the administration and regulation of the
process. With ClPC at that stage only sitting with less than a hand full of
staff, the very existence of the process seemed to be an unlikelihood. Once the licensing issues were sorted
out and the process commenced, none of the major role-players consisting of the
financial institutions and Statutory Regulatory authorities had dedicated
business rescue departments, and were they utilizing their existing enforcement
or legal departments to cope with business rescue.
Moreover, Licensed business rescue
practitioners were not properly equipped to deal with the various
technicalities in the process, the time each project required as well as the
strenuous duties and obligations placed on the business rescue practitioner.
Meanwhile, the Courts were quickly
overrun trying to deal with completely new and complex business rescue
matters.
Now, approximately two years down
the road, as a result of the clear demand for business rescue in South Africa,
all the role-players in the industry has substantially grown in infrastructure,
skill and knowledge gained by experience in the process.
The CIPC now has a dedicated
department growing daily in numbers and infrastructure dealing with these
matters. They have joined hands with various tertiary institutions,
professional organizations and regulatory bodies that have developed practice
driven business rescue courses and seminars throughout the year for anyone
interested in the process. Professional bodies have become part of the process
and are motivating their members to become part of this exciting and dynamic
industry.
The major financial institutions
and Statutory regulatory authorities have created dedicated business rescue
departments with individuals skilled to sensibly deal with these matters.
The responsibility, duties,
obligations and liability that a conditionally licensed business rescue
practitioner faces each day, has made practitioners more cautious in taking on
new projects. Surely separating the individuals that are in it for the long run
from those simply not equipped to handle the process. As a further result of
the involved nature of business rescue, practitioners are naturally forming
teams of specialist to cater for the demand.
The Courts have made numerous
decisions pertaining to the interpretation of the Act, the applicability and
enforcement of the business rescue process that provides guidance and legal
surety to everyone in the industry.
The liquidation statistics in South
Africa is furthermore constantly dropping as more and more individuals are
learning the benefits of the process. Yes, at this stage more than 800 business
rescue applications have been lodged of which it is recorded that approximately
100 have been successfully implemented according to the Cipc. But have regard
to the fact that each month the number of business rescue matters increase and
therefore, of the more than 800 matters lodged to date, hundreds are still
pending and in the process of finalization. This clearly renders any statistic
in this regard inaccurate, especially at such an early stage.
The fact of the matter is that
business rescue is here to stay, and like it or not, even the smallest
percentage success rate results in the retention of jobs and livelihoods. With
millions of people unemployed, and with South African businesses facing a
hostile environment due to various economic factors, every single business that
is saved counts.
