Original Research

Competencies for the effective management of legislated business rehabilitations

Rajendra Rajaram, Anesh M. Singh
South African Journal of Economic and Management Sciences | Vol 21, No 1 | a1978 | DOI: https://doi.org/10.4102/sajems.v21i1.1978 | © 2018 Rajendra Rajaram, Anesh M. Singh | This work is licensed under CC Attribution 4.0
Submitted: 08 June 2017 | Published: 12 April 2018

About the author(s)

Rajendra Rajaram, School of Accounting, Economics and Commerce, University of KwaZulu-Natal, South Africa
Anesh M. Singh, School of Accounting, Economics and Commerce, University of KwaZulu-Natal, South Africa


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Abstract

Background: In 2011 a new Companies Act (No. 71 of 2008) was implemented in South Africa. A feature of this Act was the introduction of business rescue legislation. Although this legislation was implemented in May 2011, statistics indicate that the success rate for business rescues is approximately only 12%. This low success rate prompted debate relating to the effectiveness, and continued suitability of a legislated business rescue as a mechanism to rehabilitate financially distressed companies. A feature of the business rescue environment in South Africa is the lack of knowledge, necessitating more research in the field.

 

Aim: Due to the importance of the business rescue practitioner in the overall success of a rescue, the research focused on establishing competencies required to be a successful practitioner.

 

Setting: The research was undertaken in South Africa between 2015 and 2017.

 

Methods: A mixed methods research approach was utilised to identify the important competencies of a successful practitioner. A survey was conducted with the membership of the Turnaround Management Association of Southern Africa. The survey was mailed to 130 members and the response rate was 54%. The survey was complemented by undertaking interviews with 7 of the top 10 business rescue practitioners, according to their number of practitioner appointments.

 

Results: The original contribution to knowledge of this study is the identification of a set of competencies that can be utilised to accredit business rescue practitioners and the emphasis on an accounting qualification and effective cash management skills that a successful practitioner must possess.

 

Conclusion: The knowledge generated from this research will benefit business rescue practitioners, the financial sector and stakeholders of companies intending to go into a legislated business rehabilitation.


Keywords

business rescue; business rescue practitioner

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