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- Title
Business Rescue Legislation: Rehabilitating or Debilitating Business Rescue Success During Covid-19.
- Authors
Ramnanun, Kajal; Rajaram, Rajendra; Nyatanga, Phocenah
- Abstract
In South Africa (SA), business rescue was introduced in 2011 to assist financially distressed companies. However, the COVID-19 pandemic triggered an avalanche of economic uncertainties, and in 2020, SA became the fifth highest country affected by COVID-19 infections, resulting in a total shutdown of all businesses, except for essential services. The combined effect of lockdown levels and collapses in supply chains resulted in a 42% increase in companies filing for business rescue between April and October 2020. This study diagnosed the shortcomings of the current business rescue legislation, in the context of a pandemic, which could have affected the financial rehabilitation of those companies applying for business rescue. The discussion is grounded on existing business rescue literature. This study comprised of a critical review of existing literature, as a methodology to conduct the study. The study identified several shortcomings such as inadequate time frames for the business rescue process, insufficient definition of reasonable prospect and a lack of procedures for a company filing for business rescue in a pandemic that could have impacted distressed companies and compromised prospects of resuscitation. The study recommends that amendments be made to current legislation as a panacea for distressed companies due to COVID-19.
- Subjects
SOUTH Africa; FINANCIAL bailouts; COVID-19 pandemic; BUSINESS success; BUSINESS enterprises; GOVERNMENT shutdown; ECONOMIC uncertainty
- Publication
African Journal of Business & Economic Research, 2022, Vol 17, Issue 4, p101
- ISSN
1750-4554
- Publication type
Article
- DOI
10.31920/1750-4562/2022/v17n4a5