Is South Africa the ‘Liquidation Nation’?


Is South Africa the ‘Liquidation Nation’?
Is South Africa the 'Liquidation Nation'? Image source: Pixabay

Johannesburg, 9 November 2022: Recently, while perusing the Daily Maverick website, I came across a Madam & Eve cartoon by Stephan Francis and Rico. It was titled “Liquidation Nation” and it depicted various directors of an unnamed organisation taking to a “War Room” in search of solutions for the water crisis in Gauteng – to rather comical effect!

The cartoon, and its title, got me thinking about the conundrum business owners face when it comes to the decision to pursue business rescue or opt for liquidation. Even though the cartoon was clearly about the water crisis, there were a number of similarities between the illustrated “War Room” of directors, and the directors of any business who realise they’re in financial distress and that they may need to commence with business rescue proceedings.

Liquidation Inflation

According to data released by StatsSA, business liquidations in South Africa have soared by 44.8% in the year to August 2022, while the number of businesses opting to enter business rescue has declined – an alarmingly clear sign that too many in the “War Room” of business are assessing their financial positions much too late in the day. This percentage rise equates to the number of companies being liquidated to more than triple the number of companies that were placed in business rescue.

To anyone who’s not in the industry of business rescue, it might seem that South African companies simply prefer the liquidation route, rather than opting to try and rescue their businesses. However, the reality is much more complex than that.

Liquidation Domination

In my eyes, the people in the Madam & Eve cartoon’s “War Room” could hypothetically represent the directors of a business, held up in the boardroom as they set about looking for strategies to save their distress, albeit from cash flow constraints or other lack of resources, in order to continue trading. Yet, much like the limited time available to the powers that be when it comes to addressing the water crises of our water-scarce country, so too is there little time to dwell in denial when a business has got into trouble.

Working in the business rescue industry for many years, it appears to me that South African financial institutions prefer the liquidation route, rather than opting to give businesses some form of a chance of survival, and ultimately, saving jobs. When I was a banker many years ago, the legal and risk departments would always say that the first loss is the best loss. But I don’t agree, because in most instances where time is on our side, a solution can be found to save and turn around the business; and not always by cash injections and further loans.

One of the businesses I embarked on the business rescue process with was a construction company that took four years to turn around to solvency and profitability without any additional cash injections. While four years may seem like a long time, the result – a profitable business offering stable jobs to its employees – far outweighs any alternative, since it benefits the business, its employees, and ultimately, the broader South African economy.

One of the most influential factors in the possibility of successfully implementing business rescue is the timing. If companies and directors assess their financial position too late in the game, there is little that can be done to assist, because there is no reasonable prospect of a successful rescue. Often, the companies that leave such assessments too late in the day have little alternative but to file for liquidation, making what ought to be considered a last resort into the only option, with many left to suffer the consequences.

With liquidation in South Africa, the businesses cease to exist. The directors no longer have any director powers, and all employees are retrenched. While it is stressed that the correct retrenchment procedures must be followed, the process is undeniably a difficult and emotional one, made by no means easier in light of the country’s concerning rates of unemployment.

Let’s Become a Business Rehabilitation Nation

Much like the voice of reason speaking up in the “War Room” of the Madam & Eve cartoon, suggesting that the best way to address the water crisis is to “fix all the leaking pipes and build new reservoirs” (a suggestion, it’s worth noting, that is met with silence), so too must there come a time for a voice of reason to speak up in a business’s boardroom to advise that it’s time to embark on business rescue.

It’s important to remember that the main objective of the process of business rescue is to return the business back to solvency; to turn it around, to save jobs, and to provide a better return for affected parties, than that of immediate liquidation. And if we are ever to begin to turn the rising tide of unemployment, businesses have got to understand the benefits of business rescue; to swallow their pride and engage realistically with the challenges they face; and understand the hope that business rescue can bring – not only for the people who work for them, but to the greater South African population.

Sandra Beswick



Sandra Beswick is a Senior Business Rescue Practitioner and the Director of business rescue specialists, Fluence Capital, with a wealth of experience giving professional advice about effective business management practices, turnaround strategies, enterprise development, and the funding of businesses. After working in the banking industry for decades, Sandra chose to dedicate herself to her passion of business development support, always operating with an approach of empathy, integrity, respect and kindness.

Sandra loves the challenge of turning a negative situation into a positive outcome.


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