Liquidation should be a last resort, not a first response to financial trouble. Business Partners Limited’s Gerrie van Biljon sets out three practical steps to help a distressed but viable business recover before it gets to that point.
1. Fix liquidity first
No turnaround plan works without enough cash to stay afloat while it takes effect. This may mean tighter management of the balance sheet, additional funding from existing investors, a pitch for new investment, or selling off a non-core part of the business to free up capital.
2. Be honest about management
Keeping the wrong people in leadership positions during a crisis is one of the most common reasons turnarounds fail. It is a difficult decision, but restructuring management, when necessary, is often unavoidable.
3. Consider formal business rescue
South Africa’s Companies Act allows a distressed company to apply for business rescue through the Companies and Intellectual Property Commission, appointing a Business Rescue Practitioner to help restructure operations and negotiate with creditors while the business keeps trading.
Frequently asked questions
What is business rescue in South Africa?
A formal process under the Companies Act that lets a financially distressed but viable company restructure under a licensed practitioner, rather than going straight to liquidation.
How do I apply for business rescue?
By filing a notice with the Companies and Intellectual Property Commission to begin business rescue proceedings.
What is the first step when a business starts struggling financially?
Securing enough liquidity to keep operating while a recovery plan is put in place, since no turnaround strategy works without cash flow.
Is liquidation always the end of a struggling business?
No. Business rescue exists specifically to give viable but distressed companies a structured alternative to liquidation.
Why do business turnarounds often fail?
Commonly because management issues go unaddressed too long, or the business runs out of cash before the recovery plan can take effect.
Further reading: When you have to liquidate your business
Originally published in 2016. Updated September 2026.
