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8 Mich. Bus. & Entrepreneurial L. Rev. 101 (2018-2019)
The Suitability of South America's Business Rescue Procedure in the Reorganization of Small-to-Medium-Sized Enterprises: Lessons from Chapter 11 of the United States Bankruptcy Code

handle is hein.journals/mijoeqv8 and id is 107 raw text is: THE SUITABILITY OF SOUTH AFRICA'S BUSINESS RESCUE PROCEDURE IN THE REORGANIZATION OF SMALL- TO MEDIUM-SIZED ENTERPRISES: LESSONS FROM CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE Mikovhe Maphiri* South African small- to medium-sized enterprises (SMEs) are the bread and butter of our economy. Providing much-needed employment and developing the skills of historically disadvantaged persons formally and informally are some of the most significant benefits of SMEs in a developing country such as South Africa. However, despite these significant contributions to the socio- economic development of the country, SMEs generally have the lowest survival rates in the world as compared to large enterprises globally, resulting in high rates of business failure and the loss of jobs which these entities create. The Companies Act of 2008 replaces the previous judicial management corporate reorganization procedure for companies in South Africa with the new business rescue model and a compromise between a company and its creditors. Business rescue provides companies in financial distress with the opportunity to reorganize, strategize, and devise reorganization measures that are useful, efficient, and capable of yielding a better return for creditors than liquidation. This Comment comparatively analyzes whether the South African corporate rescue systems, past and present, have developed in line with the needs and interests of South African SMEs in a manner that is efficient and sensitive to the inherent weakness of our economy and the distinctive needs of SIEs in a developing country such as South Africa. INTRODUCTION ...................................................... 102 I. THE ROLE OF SMES IN DEVELOPING COUNTRIES: A PLATFORM FOR Socio-ECONOMIC DEVELOPMENT ........................... 103 A. The Definition and Role ofSMEs in Developing Countries...................................... 103 * Lecturer and Ph.D. Candidate, University of Cape Town; Grotius Research Scholar, University of Michigan. LLB, University of Limpopo; LLM, University of Cape Town. Internation- al Alliance of Research Universities (IARU) GSP Scholar, University of Cambridge; Reese Miller Scholar, Attorney of the High Court South Africa. This Comment is based on a Master's thesis submitted as part of the requirements of a Master's degree specializing in commercial law at the University of Cape Town. A special thanks to Advocate Richard Bradstreet, an expert in business rescue in South Africa and a Senior Lecturer in the Department of Commercial Law at the Universi- ty of Cape Town. My Master's thesis was supervised by Advocate Bradstreet. He has consistently provided helpful input on this Comment and insights into the business rescue industry in South Af- rica. All opinions in this Comment are my own. 101

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