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Post-Commencement finance - Domiciled resident or uneasy foreign transplant?

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      Abstract

      The 2008 Companies Act 71 of 2008 introduced a new business rescue regime into South African company law, bringing it into line with trends in developed countries, particularly the United States. Indeed, it appears that the United States Chapter 11 model was followed in this process, introducing the business rescue concept as a legal transplant. Corporate law is well suited to legislative borrowing, but there are important caveats to bear in mind when doing so. In particular: the context and legal culture of the country of origin may differ from those of the destination country. South Africa's commercial environment is different from that of the United States, problematising a transplant of Chapter 11's concepts. Post-commencement finance will be used as a micro-study of this broader phenomenon, and this topic will be investigated with comparative reference to the position in the United States. It will be argued that an essential difference between the two procedures is the lack of legislatively mandated court oversight in South Africa. This impacts on the interests of creditors, as well as on the availability of fresh finance. This results in problems in the implementation of the post-commencement finance provisions, which threaten the viability of this particular legal transplant.

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      Most cited references 54

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      Legal Transplants: An Approach to Comparative Law

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        Contemporary Company Law

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          Henochsberg on the Companies Act 71 of 2008

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            Author and article information

            Affiliations
            orgnameUniversity of Cape Town South Africa andrew.hutchison@ 123456uct.ac.za
            orgnameUniversity of Cape Town South Africa helena.stoop@ 123456uct.ac.za
            Contributors
            Role: ND
            Role: ND
            Journal
            pelj
            PER: Potchefstroomse Elektroniese Regsblad
            PER
            Publication of North-West University (Potchefstroom Campus) (Potchefstroom, North-West Province, South Africa )
            1727-3781
            2017
            : 20
            : 1
            : 1-41
            S1727-37812017000100021
            10.17159/1727-3781/2017/v20n0a1370

            This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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            Figures: 0, Tables: 0, Equations: 0, References: 54, Pages: 41
            Product
            Product Information: SciELO South Africa

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