When a company is placed into business rescue under Chapter 6 of the Companies Act 71 of 2008, one of the most consequential early decisions is choosing who will lead that process: the Business Rescue Practitioner (“BRP”).
Business rescue is an intense period for directors and business owners. Between managing the moratorium, navigating creditor expectations, and confronting the real possibility of liquidation, the pressure is relentless. It is natural to focus on a practitioner’s qualifications and track record – and these matter – but they are only part of what determines success. The personal qualities of the practitioner you appoint will shape every interaction, every negotiation, and ultimately the outcome of the rescue.
Under South African law (specifically section 140 of the Companies Act 71 of 2008), a BRP is vested with extensive authority upon appointment. The BRP assumes full management control of the company, with the power to delegate functions to existing directors or, where the rescue demands it, to appoint or remove persons from key management positions. The BRP must also investigate the company’s affairs, assess whether a viable rescue is achievable and, if so, develop and implement a business rescue plan for adoption by creditors.
A BRP is subject to the same fiduciary duties and standards of conduct applicable to directors under sections 75 to 77 of the Act and is personally accountable for any breach. The practitioner’s conduct is also subject to oversight by the Companies and Intellectual Property Commission and, ultimately, the courts. Given this level of personal exposure, the role demands a practitioner with far more than technical knowledge of insolvency law
– it requires integrity, discipline, and sound professional judgement.
Beyond formal qualifications and statutory powers, what distinguishes an effective BRP? Having worked alongside numerous practitioners in contested rescues, we have seen that it is often a practitioner’s composure under creditor pressure, willingness to deliver unwelcome news, and ability to hold competing stakeholders together that determine whether a rescue plan is adopted or whether the company slides into liquidation.
Sound judgement is critical. A good BRP knows when to press for a quick resolution and when to allow stakeholders time to consider their positions. Look for someone who can distil complex financial and legal issues into clear, actionable guidance – particularly when presenting to creditors who may have limited familiarity with the rescue process. Communication in this context is not merely a soft skill: it means running effective section 147 meetings, managing creditor expectations during the plan development period, and being forthright with directors when the numbers do not support a rescue.
Leadership in a business rescue is tested daily. A BRP may need to convince a sceptical bank to extend post-commencement finance, reassure employees that their claims rank ahead of unsecured creditors, or tell a director that the company’s best prospect is a controlled wind-down rather than continued trading. The ability to command a creditors’ meeting, hold together a fragile consensus among stakeholders, and make unpopular decisions with conviction is what separates practitioners who deliver results from those who merely administer a process.
Selecting a BRP is not a box-ticking exercise. The practitioner you appoint will have sweeping control over your company’s affairs, its relationships with creditors and employees, and ultimately its survival. Before making that appointment, interrogate the candidate’s track record in contested rescues, their standing with the CIPC, and their willingness to engage transparently with all affected parties. A technically competent practitioner who lacks the temperament for the role can do as much harm as an inexperienced one. Choose deliberately – the appointment may be the most important decision you make in the life of your business.
To explore how we can help, contact me at carahc@caf.co.za or by telephone on 021 487 7900.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).