- A record 48 companies entered business rescue in February 2026 alone, and filings are expected to rise further through 2026 as economic pressures intensify.
- The Turnaround Management Association South Africa (TMA-SA) has called for a sustained national effort to build a business rescue culture that positions restructuring not as failure, but as a critical tool for economic recovery.
- The call follows TMA-SA’s inaugural Conference on Distressed Investment and Business Rescue, which brought together practitioners, investors, legal experts, academics, and government stakeholders to assess the state of South Africa’s restructuring environment and identify priorities for reform.
South Africa’s corporate distress burden is intensifying, with business rescue filings expected to increase through 2026 as continued tough trading conditions pressure the survival of corporates. Against a backdrop of slowing global growth, elevated interest rates, persistent energy costs, weakened consumer demand, and ongoing geopolitical tensions in the Middle East, businesses are facing mounting operational and financial challenges that are testing their resilience and long-term viability.
Research prepared for the Turnaround Management Association Southern Africa (TMA-SA), based on an analysis of 4,373 Companies and Intellectual Property Commission (CIPC)proceedings between 2005 and March 2026, shows that 48 companies entered business rescue in February 2026 alone, the highest monthly figure on record. The number of companies currently in business rescue now stands at 1,409.
The geographic spread also points to uneven access to the rescue framework. Gauteng accounts for more than half of all new filings (51.1%), while KwaZulu-Natal and the Western Cape contribute a further 23%. By contrast, provinces such as the Northern Cape and Northwest account for less than 5% of filings, suggesting limited awareness of, or access to, business rescue mechanisms in some regions.
“Our research shows that business rescue is neither quick nor a guaranteed lifeline,” says Stefan Steyn, a director of TMA–SA,who conducted the research on behalf of TMA-SA. “Successful rescues take an average of 18 months to complete, while companies that ultimately fail spend more than a year in the process before ending in liquidation. That raises important questions about whether some businesses are entering rescue too late or remaining in the process without realistic prospects of recovery.”
In contrast, the data suggests that despite rising levels of corporate distress, business rescue is delivering meaningful outcomes, with two in three companies entering the process returning to operation and preserving 87% of their economic value.
Following the landmark conference on distressed investment held in Johannesburg, TMA-SA Chairperson Haroon Laher says South Africa must fundamentally shift how business rescue is perceived. “Business rescue is not for the ‘terminally ill’. It is a strategic intervention that can create significant social and economic value by preserving jobs, protecting businesses, and preventing further losses to creditors and the broader economy.”
“In the United States, restructuring is widely understood through the lens of Chapter 11. In South Africa, business rescue is still too often associated with failure,” adds Laher. “We need to change that. We need a business rescue culture that is trusted, credible and used proactively rather than only as a last resort.”
While business rescue is traditionally evaluated on its ability to maximise returns for creditors relative to liquidation, its true impact is far broader. Corporate failure can have far-reaching consequences for employees, local communities, suppliers, and regional economies. The Tongaat Hulett rescue demonstrates how preserving a distressed business can protect substantial social and economic value that would otherwise be lost through liquidation.
“Rather than automatically liquidating financially distressed companies, business rescue creates a structured opportunity to reorganise operations and debt in pursuit of recovery,” says Laher. “It is a more compassionate and constructive approach that seeks to balance the interests of all stakeholders, other businesses, and the. economy alike.”
With reported success rates of between 66% and 70%, measured across outcomes ranging from full operational recovery to asset disposals that deliver better returns than liquidation, business rescue remains a credible and economically valuable mechanism.
Yet data presented at the TMA–SA Conference revealed a persistent and damaging pattern: companies are entering business rescue too late. When directors delay responding to early warning signs, the opportunity for meaningful restructuring narrows significantly.
“Business rescue is not a solution in itself; it creates the framework and time needed for a company to find solutions,” says Laher. “The later a company enters rescue, the harder recovery becomes. By the time lenders pull the plug, and the choice is between liquidation and rescue, practitioners are often working against overwhelming pressure.”
The trust and capability deficit
Conference participants acknowledged a growing trust deficit within the business rescue ecosystem. Lengthy proceedings, costly legal battles, unclear fee structures, misconceptions about the scope and objectives of the business rescue regime, and uncertainty regarding outcomes have undermined confidence among creditors, shareholders, and the broader public. Consequently, successful business rescues are often overshadowed by a small number of high-profile failures.
Laher also highlighted a capability deficit among practitioners.“There is already an informal reputation system in the market around which practitioners and stakeholders trust to work with,” says Laher. “If practitioners cannot demonstrate capacity, integrity, knowledge, and experience, they simply will not be appointed. That tells us that confidence in parts of the industry needs strengthening.”
Serving as a network for business rescue practitioners committed to corporate renewal, TMA-SA says it is focused on raising standards across the profession through education, peer accountability, and greater transparency around fees and timelines.
The case for legislative reform
South Africa’s business rescue framework, which came into effect in 2011 through Chapter 6 of the Companies Act, drew on restructuring models developed in the United States, Australia, and the United Kingdom to help viable businesses recover rather than collapse.
The introduction of Chapter 6 represented a fundamental shift in South Africa’s approach to corporate distress, establishing a structured mechanism to rehabilitate financially distressed businesses, safeguard employment, and preserve economic value.
However, as the system evolved, shortcomings in certain provisions of the legislation became apparent, prompting ongoing debate around aspects of the framework.
While conference participants agreed that the provisions of Chapter 6 remain functional, they argued that the framework requires refinement and modernisation.
Key concerns raised included:
- A one-size-fits-all regime: Applying the same business rescue framework to SOEs, micro-enterprises, and large corporates no longer reflects the vastly different operational realities, risks, and cost structures of these entities, underscoring the need for a more differentiated approach.
- Lagging behind African peers: Several other African jurisdictions are moving ahead of South Africa in restructuring law reform, creating a risk that South Africa loses its position as a leader in business rescue and a destination for distressed investment on the continent.
In addition, Laher called for the establishment of a dedicated review body to modernise South Africa’s business rescue regime, explore an expanded legislative mandate, and support specialised judicial training for the newly established Insolvency Court. He emphasised that effective rescue mechanisms are essential to mitigating the impact of corporate failure.
“Business rescue is more than a legal mechanism; it is a means of preserving economic value, protecting jobs, and giving viable businesses a pathway to recovery. At its best, it strengthens confidence in the economy by encouraging responsible leadership, supporting entrepreneurship, and enabling businesses to adapt during periods of financial distress,” he says.
“The TMA-SA Conference reinforced that South Africa does not lack the tools or the talent to make business rescue work. What it needs is the will to embed a business rescue culture, a constructive and proactive mechanism through which distressed businesses are preserved, creditors are protected, and economic value is retained,” concludes Laher.
