Abuse of business rescue process


In Absa Bank Limited v Newcity Group (Pty) Ltd and Another Related Matter [2013] 3 All SA 146 (GSJ) the court reiterated the following general principles applicable to business rescue applications, namely:

•The threshold standard for deciding that a business rescue order is appropriate is whether there is a ‘reasonable prospect or reasonable possibility’ of achieving a rescue through the statutory objectives stated in s 128(1)(b) of the Act. In this regard the point of departure is that it is preferable to rescue a company than to let it drift, or sometimes plummet, into extinction.

•Close scrutiny of the factual platform presented and the rationale mounted on that platform are required in order to decide if the threshold standard has been met. The assessment has to be made on solid information presented to the court, not on conjecture.

•The risk of abuse or manipulation of the rescue application process through ‘un-genuine’ applications to procure an illegitimate immunity must be guarded against