business rescue vs liquidation - saripa

Session NameSARIPA 2015-11-26 11-29 AM

Date Created Active Participants Total Participants11/26/2015 8:57:35 AM 244 244

Average Score Questions0.00% 12

Results by Question

1. Which hat do you wear? (Select only one) (Demographic Assignment)

Percent Count

Liquidators 27.35% 61

Business rescue practitioners 12.11% 27

Creditors (Banks/SARS/Other) 30.94% 69

Lawyers (Legal) 29.60% 66

Totals 100% 223

Percent Count

Strongly agree 5.24% 12

Agree 6.11% 14

Neutral 8.73% 20

Disagree 58.08% 133

Strongly Disagree 21.83% 50

Totals 100% 229

3. Business rescue should not be used as an alternative form of liquidation process; it is too informal, unregulated and is open to abuse? (Multiple Choice)

Percent Count


Agree 39.11% 88

Neutral 4.89% 11

Disagree 15.11% 34


Totals 100% 225

2. Looking at the decline in liquidations over the last few years … STATS SA have reported a steady decline in the number of liquidations since the introduction of Chapter 6 of the 2008 Companies Act. Is the business rescue process going to replace liquidations in South Africa in the next 10 years? (Multiple Choice)

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Prefer to sit back knowing that they can always rely on their security in a liquidation? 47.00% 102

The statement is false; banks are/becoming more actively involved and see business rescue as a sustainable outcome for them as creditors? 27.65% 60

Banks prefer liquidation and actively pursue this alternative at all costs? 25.35% 55

Totals 100% 217

5. Trade unions have not been pro-active in placing financially distressed companies into business rescue despite clear benefits being available to employees. Is this because: (Multiple Choice)

Percent CountSaving jobs is not a reason for placing a company into business rescue? 6.88% 15

Trade unions do not understand the process? 54.13% 118

Once in business rescue, there is an expectation that the business rescue practitioner will always look after employees…

29.82% 65

Trade unions are indifferent and rely on employees' preferent status as creditors in a liquidation?

9.17% 20

Totals 100% 218

Percent Count


Agree 41.71% 88

Neutral 15.64% 33

Disagree 20.38% 43


Totals 100% 211

7. Should post-commencement funders always rank behind secured creditors in a liquidation and only get to share in the free residue after secured creditors have been paid in full? (Multiple Choice)

Percent Count


Agree 28.38% 63

Neutral 4.05% 9

Disagree 25.68% 57


Totals 100% 222

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6. Shareholders are left out in the cold in a business rescue process. In a liquidation, their shares have negligible/zero value? Is it fair that shareholders (often exposed to large shareholder loan positions) do not have a say in the business rescue process unless their rights are being affected, such as a sale of share transaction proposed in a business rescue plan? (Multiple Choice)

4. Secured creditors (banks) have to date not been actively involved in launching business rescue proceedings in financially distressed companies. The attitude adopted historically is that the "first loss is the best loss". Is this because they: (Multiple Choice)

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Prefer to sit back knowingthat they can always rely on

their security in aliquidation?

The statement is false; banksare/becoming more actively

involved and see businessrescue as a sustainableoutcome for them as

creditors?

Banks prefer liquidation andactively pursue this

alternative at all costs?

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Saving jobs is not areason for placing a

company intobusiness rescue?

Trade unions do notunderstand the

process?

Once in business rescue, there is an

expectation that the business rescue practitioner will

always look after employees…

Trade unions areindifferent and rely

on employees'preferent status as

creditors in aliquidation?

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8. Can a business be sold as a going concern more effectively in a business rescue than in a liquidation? (Multiple Choice)

Percent CountAgree 60.73% 133Disagree 18.72% 41Creditors are more comfortable with the certainty offered by a sale of business in a liquidation?

11.87% 26

Makes no difference because the same values and certainty are achieved? 8.68% 19

Totals 100% 219

Percent Count


Agree 47.20% 101

Neutral 7.01% 15

Disagree 12.15% 26


Totals 100% 214

Percent Count


Agree 46.89% 98

Neutral 10.53% 22

Disagree 25.84% 54


Totals 100% 209

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10. The ability to cancel contracts in a business rescue in terms of section 136 is a very powerful mechanism to save a company's business. The liquidator's ability to deal with executory contracts provides the same opportunity and allows the liquidator to then sell the business as a going concern at full value. Why then bother with a business rescue at all? (Multiple Choice)

9. There is no certainty in respect of the status of claims in a business rescue when compared with liquidation? In a liquidation, claims are either rejected or accepted. In a business rescue there remains uncertainty in regard to disputed / contingent / voting interests / damages claims? (Multiple Choice)

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Agree Disagree Creditors are morecomfortable with thecertainty offered by asale of business in a

liquidation?

Makes no differencebecause the same

values and certaintyare achieved?

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11. Has business rescue developed to such an extent and as a result become part of South Africa’s commercial landscape that it justifies a call for a specialist insolvency court? (Multiple Choice)

Percent Count

Agree 79.19% 175

Disagree 9.50% 21

Too soon to tell 11.31% 25

Totals 100% 221

12. The preferred mechanism for dealing with financially distressed companies is? (Multiple Choice)

Percent Count

Liquidation 58.77% 124

business rescue 41.23% 87

Totals 100% 211

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Liquidation business rescue