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Why we can't place all our SOEs under business rescue

12 December 2019 5:43 PM
Tags:
SAA
Economy
Attorney
state-owned enterprises
liquidation
business rescue
Gareth Cremen
Lawtons
Should we use business rescue to save all our parastatals? Specialist attorney Gareth Cremen explains why that's not a good idea.

Although most of South Africa's state-owned enterprises (SOEs) need saving, putting them all under business rescue could pose some dangers.

Specialist attorney Gareth Cremen says placing SOEs under business rescue back-to-back could put the economy at risk of a downward spiral.

If you have this repeated pattern of all these SOEs being place into business rescue one after the other, it will force a downward spiral in the economy and a further recession.

Gareth Cremen, Specialist attorney - Lawtons 

He also says it would be best for some SOEs to be liquidated and rebuilt from scratch.

It's probably cheaper in the long-run to rather liquidate and start afresh at some of these entities.

Gareth Cremen, Specialist attorney - Lawtons 

RELATED: 5 moves Les Matuson needs to make now that he's running the show at SAA

Cremen explains that SOEs, whether it's Transnet or Eskom, Denel or Prasa, all face different contexts and cant be given blanket solutions.

You have to look at these matter in isolation. You have to look at each entity. It's not simply once size fits all.

Gareth Cremen, Specialist attorney - Lawtons 

There certainly are some other SOEs that may have to be placed into business rescue with immediate effect or there has to be a drastic turnaround before the damage is done in the market.

Gareth Cremen, Specialist attorney - Lawtons 

Business rescue has always been a swearword within government historically. You could not mention it.

Gareth Cremen, Specialist attorney - Lawtons 

Listen to the discussion on Afternoon Drive with John Maytham:

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12 December 2019 5:43 PM
Tags:
SAA
Economy
Attorney
state-owned enterprises
liquidation
business rescue
Gareth Cremen
Lawtons

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