Business Rescue and the applicable legislation, in comparison with other jurisdictions and practice areas, is a relatively new concept in South Africa. Unfortunately, as with most innovations, there are also individuals who seek to utilise the mechanism to obtain ill-gotten gains.
Our Courts have started delivering more judgments to set aside business rescues that could be regarded as merely aimed at frustrating creditors and which hold no true prospect of successfully rescuing the company, converting them into liquidation proceedings.
Notwithstanding this, when properly applied, business rescue remains an excellent tool to salvage a financially distressed company. It can be successful if applied timeously and with the guidance of skilled, experienced, and qualified practitioners and advisors.
In the current economic climate, it is encouraging to see positive results from business rescue interventions. For instance, Ster-Kinekor has reportedly experienced a turnaround after being placed in business rescue in 2020. Initially, due to a weak economy, an actors and writers strike in Hollywood, and the ever-present impact of loadshedding, the company initiated a retrenchment process, resulting in a quarter of its staff being retrenched and the closure of nine cinemas.
The restructuring has since been completed, and the company has expanded its service and product offerings, leading to record attendance at cinemas in July 2023. Ster-Kinekor is now leveraging its extensive infrastructure to expand into new markets, including hosting e-gaming and coding events.
Business rescue appears to be steering Ster-Kinekor into a much more positive position than it found itself in when the process was initiated.
If your business is facing financial distress, don't wait until it's too late. Engage with Barnard's Business Rescue team to explore your options and navigate the process effectively. Our skilled and experienced legal practitioners are dedicated to guiding you through each step, ensuring that your business has the best chance of recovery. Contact us today to schedule a consultation and let Barnard's expertise be your strategic partner in securing a successful business rescue.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.