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South Africa needs to re-examine its understanding of restructuring to shift the focus of business rescue efforts there as the default intervention for strained organisations, rather than on liquidation.
While the US reported 655 mega-insolvencies by October 2025, the highest level in 15 years, one of South Africa’s greatest challenges with the solvency of companies is the inclination to liquidate rather than restructure, says Michael Dorn, CEO of RT Group.
“South Africa has a slightly different issue. If you embrace the chief risk officer [CRO] concept, you are embracing an entrepreneurial approach to restructuring. That requires a very specific skill set. A CRO should be a strong generalist — someone who can assess an organisation holistically and entrepreneurially and find a way out of the crisis.”
RT recently released the “Global CRO Study 2026″ with the IfUS Institute, which sought to understand the core competencies, potential, and challenges of the CRO role in Africa, America, Asia, and Europe.
Dorn himself has had extensive experience in the CRO role, also in South Africa. He served as the CRO for Nampak in 2023. By the end of that year, Nampak had concluded its debt refinancing and concluded deals such as a property sale in Tanzania to Canda T Investment for R109m.
South Africa is very business rescue-oriented, he said, which has to do with its legislation. While he is not against the relevant laws, such an approach prompts leaders of organisations to focus on legal matters at the expense of the operational and strategic changes that could save firms.
“One of the questions lenders and law firms regularly ask me is how we can develop more restructuring capability in the market instead of relying purely on legal processes. Another important factor is funding. Successful restructurings almost always require new capital.”
More distress funding and equity are needed, and that has only been achieved recently, even at a global level, Dorn said.
The Global CRO study found that at the end of a CRO mandate, target achievement is rated highly on average, including 4.27 out of 5 for operational realignment, 4.09 for securing long-term financing, and 3.69 for improved profitability.
Conversely, the ratings for organisational factors are significantly weaker, with “improved corporate culture” scoring 2.93 points; and “strengthened employee motivation” 2.96.
The major concern among CROs, restructuring units, and experts surveyed in the study was that every CRO is brought in way too late — the root cause of these scales and numbers.
“If you are brought in too late, there is no liquidity left, and management expects solutions immediately. If CROs are brought in earlier — as a preventative or proactive measure — they have far more time to apply strategic thinking and focus on both operational and cultural transformation.”
According to Stats SA’s latest figures for March, the total number of liquidations increased 15%, from 127 to 146, in March 2026 compared with March 2025.
“Liquidations of close corporations increased by 14 cases, and liquidations of companies increased by five cases during this period. The total number of liquidations increased by 1.1%, from 373 to 377, in the first quarter of 2026 compared with the first quarter of 2025.”
Jo Mitchell-Marais, national chair of the South African Restructuring and Insolvency Practitioners Association (Saripa), said several challenges arise from business rescue procedures, including customers’ tendency to stop doing business with a troubled company.
“Unfortunately, business rescue does carry a negative stigma, which is very disappointing. What you actually want is support for entrepreneurs, an economy that says it’s okay to make a mistake and recognises the value of a process that can protect, preserve some value, and use it to actually strengthen the business so that it can come out the other end,” said Mitchell-Marais.
“I love the name business rescue. It is what it says. Business rescue resides within our Companies Act rather than the Insolvency Act. That alone is positive. Both professionals and the media have created the negativity.”
The sensationalist stories are what sell and not the successful ones, she said. CROs need to get positive outcomes into the public domain, to overturn the stigma that one is a failure if one is in business rescue.
“It is actually responsible business ownership and leadership to seek professional help when you have a problem.”
However, she admitted that abuse of the process, when struggling businesses fall back on business rescue only as a last resort, has also led to misconceptions over what can be achieved.
“Business rescue is not a silver bullet. One of the big challenges is that it requires a lot of planning and negotiation, and stakeholder management to have a successful rescue,” Mitchell-Marais said.
A strategy for optimal asset disposal, which could include the auction platform, is an important component of the entire business rescue process, which rests on viability.
Business Times
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