Competencies for the effective management of legislated business rehabilitations

Abstract

Background: In 2011 a new Companies Act (No. 71 of 2008) was implemented in South Africa. A feature of this Act was the introduction of business rescue legislation. Although this legislation was implemented in May 2011, statistics indicate that the success rate for business rescues is approximately only 12%. This low success rate prompted debate relating to the effectiveness, and continued suitability of a legislated business rescue as a mechanism to rehabilitate financially distressed companies. A feature of the business rescue environment in South Africa is the lack of knowledge, necessitating more research in the field. Aim: Due to the importance of the business rescue practitioner in the overall success of a rescue, the research focused on establishing competencies required to be a successful practitioner. Setting: The research was undertaken in South Africa between 2015 and 2017. Methods: A mixed methods research approach was utilised to identify the important competencies of a successful practitioner. A survey was conducted with the membership of the Turnaround Management Association of Southern Africa. The survey was mailed to 130 members and the response rate was 54%. The survey was complemented by undertaking interviews with 7 of the top 10 business rescue practitioners, according to their number of practitioner appointments. Results: The original contribution to knowledge of this study is the identification of a set of competencies that can be utilised to accredit business rescue practitioners and the emphasis on an accounting qualification and effective cash management skills that a successful practitioner must possess. Conclusion: The knowledge generated from this research will benefit business rescue practitioners, the financial sector and stakeholders of companies intending to go into a legislated business rehabilitation.

The business rescue practitioners’ professionalism: are we there yet?

“…Occupations exist to serve needs, and fulfilling the needs creates the practitioner's essence of being. Rajaram and Singh (2018) emphasise the importance of professional competence and confirm the efforts required to identify and develop BRPs' professional competence relevant to practitioners' work and services. The services and tasks are evident from service package objectives, tools, methods of work and work organisation.…”

Business rescue: Adapt or die

“…As stated by Rajaram and Singh (2018), a successful business rescue practitioner should have a multitude of skills and qualifications, as seen in Figure 3. Furthermore, the improvement requires an increased effort and changed mindset from the different role players in the sector.…”

The State of Business Rescue Practitioners Professional Accreditation

“…The BRPs licensed to practice are drawn from diverse professional backgrounds, as shown in Table 1. No attempts have been made to create a BRP profession with precise tasks linked to known service standards as it has been done for the public affairs professionals (Kaynak & Barley, 2019) and Annisette (2017), Rajaram and Singh (2018) surveyed and discussed BRPs’ competencies without relying on practitioners’ community data. Eight years earlier, Bradstreet (2010) had referred to the BRP as an occupation in infancy and formative stages.…”

“…Different scholars agree on immense interest in the practical application of accreditation (Hayward, 2006; Kehal, 2019) professionalism construct (Evetts, 2013; Kaslow et al, 2018; Svensson, 2006) and competency (Antonacopoulou & FitzGerald, 1996; Campos et al, 2019; Garavan & McGuire, 2001). Survey methods have been used to study competencies (Rajaram & Singh, 2018), and inadequacies of research on business rescue (turnaround management) have been documented (Pandit, 2000; Schweizer & Nienhaus, 2017). The use of survey methods has an inherent bias that needs to be overcome using alternative competency determination methods in qualitative research.…”

“…Competency frameworks for BRPs have been referred to whenever debates on accreditation and regulations of business rescue practices are held (Papaya, 2014; Pretorius, 2014; Rajaram & Singh, 2018). In South Africa, there is a tendency to refer to accreditation, competency, and professionalism of BRPs in a non-integrated way.…”