Creditors’ interests still carry the day in business rescue: Swart v Beagles Run Investments 25 (Pty) Ltd 2011(5) SA 422 (GNP)

The Companies Act 71 of 2008 introduced a new business rescue regime into South African corporate law. Business rescue is a procedure that facilitates the rehabilitation of a financially distressed company. The business rescue regime is debtor-friendly and replaced the judicial management which was creditor-friendly and which proved to have been inadequate and ineffective in rescuing companies experiencing financial difficulties. The case of Swart v Beagles Run Investments 25 (Pty) Ltd is significant as it was the first case dealing with the business rescue provisions. The court had to consider the requirements for commencing business rescue and looked to the judicial management provisions for assistance. The study focuses on the decision of the court and its reliance on judicial management despite the two regimes having different emphasis in terms of the interests of the stakeholders and the requirements for commencing the business rescue procedure as set out in the Companies Act.