The stakeholder interest battle in business rescue and post-commencement finance

LL.M. (Commercial Law)Abstract: Nearly 6 years following the introduction of the ‘new’ business rescue proceedings under Chapter 6 of the Companies Act 71 of 2008, the time is ripe for thorough reflection on this legislation and its implementation from a stakeholder interest perspective. Analysis of the behaviour driven by Chapter 6 brings forth valuable insights with regards to the conflicting interests of secured pre-commencement creditors, business rescue practitioners as well as post-commencement financiers and the impact thereof on the provision of post-commencement finance. The ranking of claims in business rescue upon conversion to liquidation proceedings must be clarified with specific regard for the impact on the business rescue practitioner’s position as opposed to the rights of secured creditors. It is pertinent that section 135, which is a key provision in Chapter 6, lacks drafting finesse in its current form and does not provide sufficient and express clarity regarding the definition and ranking of post-commencement finance during business rescue or in the event of a subsequent liquidation