Abstract

The initiation of the voluntary business rescue of South African Airways marks the first time in South African law that a state-owned entity has been placed under business rescue. The step poses some challenging legal issues for the field of business rescue. It also holds crucial lessons for the directors of other state-owned companies in financial distress. This note considers some of these burning legal issues, including the duty of the directors of a company that is nearing insolvency to cease trading, how to assess whether a company is financially distressed and should be put under business rescue, and whether the post-commencement financier has a right to vote on the approval of the business rescue plan.