There are probably not enough of these practitioners to cope with the demand produced by the Covid fallout
The economic fallout caused by Covid-19 in SA will mean a dramatic increase in corporate failures, raising the question of whether these businesses can be refinanced — and if there are enough experienced business rescue practitioners in the country to help them survive.
Once business rescue practitioners are appointed they take control and supervise the management of the company’s affairs, engaging with all stakeholders to prepare a business rescue plan. While the plan is being drafted there is a freezing of all historical debt, providing the company with breathing space while it goes through the restructuring process.
As SA slips down the slope of the Covid-19 fallout, accessing such post-commencement finance will become more and more important — and more and more difficult. Investing in severely distressed markets is not for the faint hearted, which makes access to such financing hard to come by at the best of times. Before taking an appointment business rescue practitioners must satisfy themselves that post-commencement finance would be readily available once the rescue process commences.
However, this is only one part of the equation. The business rescue process needs expert practitioners, and these too are likely to be in short supply as the number of distressed businesses increases. Practitioners are classified into senior, experienced and junior practitioners, depending on their years of experience. It is estimated that there are only 460 licensed business rescue practitioners in SA.
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