Suggested reasons for the failure of judicial management as a business rescue mechanism in South African law

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dc.contributor.advisorBradstreet, Richarden_ZA
dc.contributor.authorOfwono, Frederick Ianen_ZA
dc.date.accessioned2015-05-27T04:07:24Z
dc.date.available2015-05-27T04:07:24Z
dc.date.issued2014en_ZA
dc.descriptionIncludes bibliographical references.en_ZA
dc.description.abstractIn 1926, the South African Parliament introduced a procedure known as judicial management. It was housed in the Companies Act 46 of 1926 (hereafter Companies Act 1926). The purpose of judicial management was to enable a failing company to restructure thus providing an alternative to liquidation. Companies play an important role in an economy and their demise affects not only creditors but also different groups of people that have a working relationship with the company. These include employees, suppliers, shareholders and other stakeholders. The legislature recognised the need to save this relationship in as far as was possible. They attempted to do so by amongst other things, providing for judicial management. Judicial management provided breathing space to companies on the brink of collapse in order to allow them to re-organise their affairs. It tried to achieve this by providing for a moratorium against creditors, divesting the control of the company from previous management who assumedly had run it aground, and by providing for the appointment of a judicial manager who attempted to turn the company around. Due to several factors, judicial management was not much of a success as will be discussed in this paper. Some of the reasons are related to weaknesses in the legislation, the attitude of the courts and in my view, the lack of local precedents initially, for the courts to follow (seeing that judicial management was the first of its kind in South African law) as well as companies themselves, who might have lacked an idea of how the procedure was to be utilised. In order to address the shortfalls in the legislation, a number of amendments were made through the years. One such shortfall was the fact that many companies that applied for judicial management had no real chance of rehabilitation and only did so to avoid a liquidation that was subject to the winding-up provisions of the 1926 Act. Some notable amendments that were made include those in 1932 under s 196(1) that provided for a moratorium to be placed on all actions against the company while it was undergoing judicial management. Section 197(A) introduced the concept of voidable dispositions as it applied in insolvency law. This provision aimed to ensure that companies did not apply for judicial management because they did not want the company to be wound up subject to the rules of insolvency law.en_ZA
dc.identifier.apacitationOfwono, F. I. (2014). <i>Suggested reasons for the failure of judicial management as a business rescue mechanism in South African law</i>. (Thesis). University of Cape Town ,Faculty of Law ,Department of Commercial Law. Retrieved from http://hdl.handle.net/11427/12904en_ZA
dc.identifier.chicagocitationOfwono, Frederick Ian. <i>"Suggested reasons for the failure of judicial management as a business rescue mechanism in South African law."</i> Thesis., University of Cape Town ,Faculty of Law ,Department of Commercial Law, 2014. http://hdl.handle.net/11427/12904en_ZA
dc.identifier.citationOfwono, F. 2014. Suggested reasons for the failure of judicial management as a business rescue mechanism in South African law. University of Cape Town.en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Ofwono, Frederick Ian AB - In 1926, the South African Parliament introduced a procedure known as judicial management. It was housed in the Companies Act 46 of 1926 (hereafter Companies Act 1926). The purpose of judicial management was to enable a failing company to restructure thus providing an alternative to liquidation. Companies play an important role in an economy and their demise affects not only creditors but also different groups of people that have a working relationship with the company. These include employees, suppliers, shareholders and other stakeholders. The legislature recognised the need to save this relationship in as far as was possible. They attempted to do so by amongst other things, providing for judicial management. Judicial management provided breathing space to companies on the brink of collapse in order to allow them to re-organise their affairs. It tried to achieve this by providing for a moratorium against creditors, divesting the control of the company from previous management who assumedly had run it aground, and by providing for the appointment of a judicial manager who attempted to turn the company around. Due to several factors, judicial management was not much of a success as will be discussed in this paper. Some of the reasons are related to weaknesses in the legislation, the attitude of the courts and in my view, the lack of local precedents initially, for the courts to follow (seeing that judicial management was the first of its kind in South African law) as well as companies themselves, who might have lacked an idea of how the procedure was to be utilised. In order to address the shortfalls in the legislation, a number of amendments were made through the years. One such shortfall was the fact that many companies that applied for judicial management had no real chance of rehabilitation and only did so to avoid a liquidation that was subject to the winding-up provisions of the 1926 Act. Some notable amendments that were made include those in 1932 under s 196(1) that provided for a moratorium to be placed on all actions against the company while it was undergoing judicial management. Section 197(A) introduced the concept of voidable dispositions as it applied in insolvency law. This provision aimed to ensure that companies did not apply for judicial management because they did not want the company to be wound up subject to the rules of insolvency law. DA - 2014 DB - OpenUCT DP - University of Cape Town LK - https://open.uct.ac.za PB - University of Cape Town PY - 2014 T1 - Suggested reasons for the failure of judicial management as a business rescue mechanism in South African law TI - Suggested reasons for the failure of judicial management as a business rescue mechanism in South African law UR - http://hdl.handle.net/11427/12904 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/12904
dc.identifier.vancouvercitationOfwono FI. Suggested reasons for the failure of judicial management as a business rescue mechanism in South African law. [Thesis]. University of Cape Town ,Faculty of Law ,Department of Commercial Law, 2014 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/12904en_ZA
dc.language.isoengen_ZA
dc.publisher.departmentDepartment of Commercial Lawen_ZA
dc.publisher.facultyFaculty of Lawen_ZA
dc.publisher.institutionUniversity of Cape Town
dc.subject.otherCommercial Lawen_ZA
dc.titleSuggested reasons for the failure of judicial management as a business rescue mechanism in South African lawen_ZA
dc.typeThesis
dc.type.qualificationlevelPostgraduate Diploma
dc.type.qualificationnamePGDipen_ZA
uct.type.filetypeText
uct.type.filetypeImage
uct.type.publicationResearchen_ZA
uct.type.resourceThesisen_ZA
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