As a business rescue practitioner, I am usually introduced to companies at the worst possible moment. By then the meeting is no longer about what the board wants to do but what the moratorium permits, what the lenders will allow or what creditors will vote for. The directors are still at the table but no longer making decisions.
That relinquishment of control is never sudden. It happens over months, often years, while everyone tells themselves that the next quarter will be better. And it is almost always avoidable.
Early on, a distressed business has a toolkit of strategic options. It can raise capital, reschedule debt, sell noncore assets voluntarily, change management, renegotiate contracts or run a competitive mergers & acquisitions process. Those options still sit with the board.
Leave it 18 months and the choices may narrow to debt standstill, forced restructure or enforcement. Leave it longer and it may be business rescue or liquidation. In business rescue, the outcome is determined by creditors, not the board. It’s a powerful tool, but it should be the last line of defence.
The Companies Act anticipates this by putting the trigger for business rescue at reasonably foreseeable insolvency or illiquidity within six months. But the commercial reality is simpler — every month of delay can remove a choice the board still owns.
Take two South African construction groups in the same sector, the same brutal market and the same window.
First, there’s Stefanutti Stocks. In 2019 its share price fell from R3.60 to 13c, with the Kusile dispute strangling cash flow. The board appointed independent restructuring advisers while it still had the authority to do so.
A multiyear informal restructure followed, run alongside management, involving new working capital, extended facilities, overhead cuts, noncore disposals and claims pursued. The company never entered business rescue.
The restructuring closed after a R580m Eskom-Kusile settlement. Today Stefanutti employs more than 6,300 people, its order book has roughly doubled to R17.2bn and its share price is about R6.
Group Five took a different path. Lenders withdrew support in March 2019 and the group entered business rescue with about R7bn in creditor and contingent exposures, more than 2,300 creditors, 119 live projects and close to 6,000 employees across 180 companies in 38 countries.
Dave Lake and I were the joint practitioners.
PwC’s modelling showed an immediate liquidation returning as little as 65c in the rand to secured creditors, 3.4c to concurrents and nothing to shareholders. We terminated proceedings in June 2026 with all creditors having been, or due to be, paid in full, and fewer than 15% of employees retrenched. There is even cash destined for shareholders.
By the standards of formal insolvency, that is about as good as it gets. But we had to break the business up to get there, and it took six years, with the board out of the room from day one.
The case of Tongaat Hulett makes the point more starkly. Accounting irregularities surfaced in 2019, forcing a R12bn restatement, but business rescue followed only in October 2022. The company is still in business rescue, with about 250,000 livelihoods across the sugar value chain riding on the outcome.
Why doesn’t anybody say anything?
My real frustration is not just with the directors.
The signals reach their advisers too. Attorneys see waiver requests, letters of demand and security calls. Banks see covenant headroom disappearing, forecasts resetting, the requests for one more facility.
They often know what they are looking at long before the board openly admits it.
Yet both tend to stay quiet. Attorneys fear jeopardising client relationships; banks fear triggering a collapse. Everyone behaves rationally within their own lane, but the collective result is a silence that costs businesses and jobs.
Other jurisdictions have early-warning mechanisms to prompt companies to act before distress becomes terminal. South Africa has no equivalent.
So, who should stand up? Whoever sees it first. If you are the attorney holding the third reservation-of-rights letter or the credit executive granting another waiver, raise the alarm. And if you are a director, do not wait to be told.
The objection I hear most is that advisers are expensive precisely when money is scarce. But delay can cost far more. An independent review clarifies the board’s options while it can still act and gives lenders confidence that the problem is being confronted.
The warning signals are rarely subtle. Cash flow is the best barometer: covenant breaches, letters of demand, lenders asking for more security, creditor days stretching and suppliers moving to cash on delivery. Forecasts that keep resetting while ebitda flatters what the cash is really doing.
Boards should stress-test forecasts against a real downside case and treat the six-month foreseeability test as a discipline rather than a technicality. When the signals appear, get an independent, unemotional view while there is still time to act.
Seeking specialist advice is not an admission of failure. The businesses that survive distress are not the ones that avoided trouble, but the ones whose boards moved while they still had choices.
Van den Steen is founder and director at Metis Strategic Advisors
