Original Research

Constraints on decision making regarding post-commencement finance in Business rescue

Marius Pretorius, Wanya du Preez
The Southern African Journal of Entrepreneurship and Small Business Management | Vol 6, No 1 | a39 | DOI: https://doi.org/10.4102/sajesbm.v6i1.39 | © 2015 The Southern African Journal of Entrepreneurship and Small Business Management
Submitted: 21 July 2015 | Published: 31 December 2013

About the author(s)

Marius Pretorius, University of Pretoria, South Africa
Wanya du Preez,

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Abstract

Since its introduction, business rescue has become a critical consideration in business strategy decision making. One of the critical components of business rescue, which appears largely unsuccessful to date, involves securing post-commencement finance (PCF) to restore the company’s financial health. Despite extensive theory in the literature on failure, there is a void regarding post-commencement finance. Specialist practitioners and financiers with extensive experience in rescue and turnaround were interviewed in this study. Findings showed that many critical factors and reasons for lack of interest are due to the newness of the South African Companies Act 71 of 2008 (introduced May 2011). These include business rescue filing being left too late; the poor financial state of the business that files for rescue; and the significant impact on the outcome by some of the key players (especially the financiers and business rescue practitioners). Better understanding of this aspect would be beneficial for creditors, rescue practitioners, shareholders, government regulators, court officials and educators alike.

Key words: business rescue, post-commencement finance, turnaround, decision making


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Crossref Citations

1. A liabilities approach to the likelihood of liquidation in business rescue
Wesley Rosslyn-Smith, Marius Pretorius
South African Journal of Accounting Research  vol: 32  issue: 1  first page: 88  year: 2018  
doi: 10.1080/10291954.2017.1414350