The aim of business rescue is to help a company facing financial difficulties recover. This process allows the company to seek temporary protection from its creditors while an independent business rescue practitioner manages its issues and proposes a recovery plan. A key objective outlined in the Companies Act (s 7(k)) is to effectively rescue and rehabilitate distressed businesses while considering the rights and interests of all relevant stakeholders. The rationale behind this approach is that liquidating a company can lead to significant economic and social harm, resulting in the loss of wealth and jobs. Such socio-economic damage should be avoided when reasonably possible, as it serves the public interest (Koen & another v Wedgewood Village Golf & Country Estate (Pty) Ltd & others 2012 (2) SA 378 (WCC) 382).
Unlike liquidation, which focuses primarily on creditor interests, business rescue seeks to harmonize the conflicting interests of creditors, shareholders, and employees (Oakdene Square Properties (Pty) Ltd & others v Farm Bothasfontein (Kyalami) (Pty) Ltd & others 2012 (3) SA 273 (GSJ) 278–9; Booysen v Jonkheer Boerewynmakery (Pty) Ltd & another 2017 (4) SA 51 (WCC) 59). This principle indicates a legislative preference for business rescue over the liquidation of viable enterprises (Ferrostaal GmbH & another v Transnet SOC Ltd & another 2021 (5) SA 493 (SCA) 503; DH Brothers Industries (Pty) Ltd v Gribnitz NO & others 2014 (1) SA 103 (KZP) 108–9), but only when there is a sincere effort to fulfill the objectives of the Act (Southern Palace Investments 265 (Pty) Ltd v Midnight Storm Investments 386 Ltd 2012 (2) SA 423 (WCC) 426).