A comprehensive analysis of information requirements in South African business rescue plans

What is it about?

This study, conducted by Kekana et al. (2024), explores the role of creditors in business rescue proceedings and their influence on the success of the process. The study found that creditors play a crucial role in the success of business rescue plans and that their decision-making is influenced by the level of disclosure of financial, commercial, and legal information in the plan. The study recommends that creditors should be provided with transparent and reliable information to make informed decisions and exercise their votes effectively. The findings of this study contribute to the development of business rescue plans and can enhance creditors' confidence in supporting and approving the plan. This research is important because it identifies the primary information needs of creditors in business rescue proceedings, which is crucial for their decision-making process. By understanding the information needs of creditors, business rescue practitioners can develop better plans that are more likely to be approved, leading to a higher success rate of the business rescue regime. Moreover, this study provides novel insights into the decision-making process of creditors in business rescue proceedings, which can help to improve the overall efficiency of the process. Key Takeaways: 1. Comprehensive disclosure of financial, commercial, and legal information in business rescue plans is critical for stakeholder decision-making. 2. Leadership and social impact information are also influential determinants. 3. This study advances academic knowledge and adds value to the development of business rescue plans, which can enhance creditors' confidence in supporting the rescue effort and approving the plan.

Featured Image

Photo by Jametlene Reskp on Unsplash

Photo by Jametlene Reskp on Unsplash

Why is it important?

The originality of this article lies in its investigation of how creditors assess the information in BR plans as a precursor to supporting the company’s reorganisation in a creditor-friendly business rescue system such as South Africa. This study provides novel insights into the decision-making process, particularly how creditors assess BR plans, address information asymmetry, and vote on the plan.