Abstract

Certain nuances relating to rescue proceedings inadvertently place a practitioner under staid constraints, hindering the execution of statutory duties. Nevertheless, section 143(1) of the Companies Act 71 of 2008 (‘the 2008 Act’) provides for the remuneration of business rescue practitioners, based on a prescribed tariff. Where practitioners find these tariffs non-commensurate, they may propose the payment of additional remuneration payable on a contingency basis. In certain circumstances, the acceptance of a ‘success fee’ by a practitioner could possibly constitute a breach of the practitioner’s duty to act with the utmost good faith. Despite incentives in South Africa encouraging practitioners to adopt workable and successful business rescue plans, some practitioners continue to negotiate for the payment of success fees. The 2008 Act is silent on the lawfulness or otherwise of success fees. This article discusses the practitioners’ remuneration arrangements concluded during rescue proceedings to determine whether they should be permitted to negotiate success fees. Furthermore, it reflects on the fiduciary duties (if any) that practitioners owe to the companies for which they are mandated to rescue.