Turnaround Industry South Africa news

Members of the Turnaround Management Association - Southern Africa are invited to apply to the position of Executive Manager: TMA-SA.

Nature of the position:

• Probably full-time with 50% availability i.e. working 10 days per month, but scheduled around TMA-SA activities and the TMA-SA timetable.
• Ideal for a participant in the turnaround industry with other sources of income.
• The following is considered to be an advantage:
  • Knowledge of TMA-SA and the turnaround industry in Southern Africa.
  • Past TMA-SA board/Exco experience.
  • Providing an office infrastructure (board room, administrator, administrative infrastructure, etc.) to TMA-SA.
• Remuneration is negotiable - could include or exclude an office infrastructure.

Duties:

• Day-to-day administrative, operational, marketing, legal and management activities of TMA-SA to enable it to provide networking, knowledge, education and promotion to its members.
• Attendance of TMA-SA board meetings, Exco meetings and functions.
• Direct support to the CEO and COO.
• The Executive Manager will report to the Chief Operating Officer.  The Executive Directors on the TMA-SA board (CEO, COO, Secretary, Finance, Marketing, Education & Knowledge, and Informatics) remain accountable for policy, direction and execution in their portfolios, but will rely on the Executive Manager for taking care of day-to-day activities and doing the legwork.  The current position of Operations Director will probably be folded into the function of the Executive Manager.

Application process:

• Please email your application to (COO of TMA-SA), which should include the following:
  • Technical and financial proposal - remuneration, availability, office infrastructure included/excluded and costs thereof, etc.
  • Experience and knowledge of the turnaround industry in Southern Africa.
  • CV.

Notes:

• Funding for this position must still be secured, and the successful applicant may be required to assist in crafting the business case and participating in the fund raising process.
• TMA-SA is not under any obligation to make an appointment.
• TMA-SA can change its requirements - the onus is really on the applicant to propose a practical and financially affordable solution.

The board of directors of the Turnaround Management Association - Southern Africa (TMA-SA) held a strategic planning workshop on Saturday 13 July. 

The traditional value propositions of networking, knowledge capturing and dissemination, education, and promotion to industry and government (new business rescue legislation, turnaround funding, etc.) remain in place, but will take on a new flavour.

The board accepted two far-reaching strategic goals and objectives, which are in the process of being converted into action plans by the Executive Directors.

• TMA-SA to become a self sustaining entity with more value-added services to its members:
  • Commercialise (not having to rely on membership fees to fund operations any more).
    • Generate its own income through offering educational services in alliance with universities (conferences, short courses, certification programmes, degree programmes, etc.).  This rather than our members offering their participation free of charge.
  • Appoint a full-time Executive Manager (not having to rely on the voluntarily spare time of Directors anymore).
  • Act as a stronger access/networking intermediary between members and the constituencies in the turnaround industry.
  • Sponsorship to fund the iniatives above.
• TMA-SA to become a professional organisation:
  • Graduated levels of membership e.g. member (open to all) and certified member (exam and other requirements).
  • Certification of members.
  • Code of ethics.
  • Possible alliance with another professional organisation to allow us to share their administrative infrastructure and professional body/educational know how.

King III Commission on Corporate Governance

Members of the Business Rescue Subcommittee are:

• Professor David Burdette (University of Pretoria) (Convener).
• Professor Anneli Loubser (University of South Africa).
• Martin Leigh (Standard Bank).
• Lawrence Ngobeni (Safrust).
• Patrick Daly (Daly Maqubela Oliphant).
• Judge Ralph Zulman.
• Jan van der Walt (Corporate Renewal Solutions).

If the views of the business rescue workshop participants will be taken into account, it may lead to key changes in the next draft of Chapter 6. 

Participants included the following:

• Tshepo Mongalo, Chairperson and Project Manager: Company Law Reform.
• Linda van Dieman: Assistant Director: Department of Trade & Industry.
• Bongi Mncube, Team Assistant: Department of Trade & Industry.
• Mpheane Lepaku, Deputy Director: Department of Trade & Industry.
• Nica Rakau, Legal Unit Head, National Union of Mineworkers (an affiliate of COSATU).
• Janek Wilimiec, Manager: Legal Services, FEDUSA.
• Justice Basheer Waglay, Judge of the Cape High Court.
• Shibishi Samuel Maruatona, Director, Business Leadership South Africa.
• Sisa Njikelana, Member of Parliament of the Republic of South Africa and of the Portfolio Committee on Trade and Industry of the National Assembly.
• Tebogo Marishane, National Treasury.
• Ashley Benjamin, Official of FEDUSA, Durban.
• Fachmy Abrahams, National Collective Bargaining Officer, SACTWU, (an affiliate of COSATU).
• Prakashnee Govender, Policy Researcher of COSATU.
• Jenny Meyer, Group Company Secretary, Anglo Platinum Ltd.
• Karin Rathbane, Associate, Deloitte, Johannesburg.
• John Evans, Principal, Deloitte, Pretoria.
• Kgosi Monaisa, Principal Company Secretarial Advisor, SASOL Ltd.
• Themba September, Chairman, Association of Business Administrators in South Africa (ABASA).
• Werner Joubert, Legal Credit, Rand Merchant Bank.
• David Burdette, Professor, University of Pretoria.
• Kevin Cron, Director, Deneys Reitz, Johannesburg (Representing the Banking Association).
• James Davies, Partner, Webber Wentzel Bowens, Johannesburg.
• Adam Harris, Council, Bowman Gilfillan.
• Rory Voller, Director: Legal Services, Companies & Intellectual Property Registration Office.
• Trevor Murgatroyd, Head: Business Support, ABSA.
• Martinus Cronje, Researcher, South African Law Reform Commission.
• Mervyn Swartz, Owner, MI Swartz & Associates.
• Robin Taggart, Manager, NEDBANK.
• Robert Driman, Director, Deneys Reitz.
• Anneli Loubser, Professor, University of South Africa.
• James Galloway, Manager, KPMG.
• Kevin Cochran, Legal Adviser, NEDBANK.
• Callie Lombard, Acting Head: Legal Business Support, ABSA.
• Jan van der Walt, Risk Manager, FNB.
• Steve Yardley, Franchise Manager, Woolworths.
• Christiaan Lamprecht, University of Stellenbosch.
• Goolam Harneker, Finance Manager, Woolworths.
• Martin Leigh, Director, Standard Bank.
• Jean du Plessis, Head: Workout and Restructuring, Industrial Development Corporation (IDC).
• Lawrence Ngobeni, Director, SAFTRUST.
• Jan van der Walt, CEO, Corporate Renewal Solutions.
• Nicky Lala Mohan, General Manager, Banking Association.
• Kenneth Shibambo, M.S.O., SASBO.
• Siphiwo Gangca, Labour Market Co-ordinator, NACTU.
• Victor Mabuli, Association for the Advancement of Black Accountants in South Africa (ABASA).
• Jill Oliphant, Attorney, DMO Attorneys.
• Thavi Padiachy, Director, African General Equity Financial Solutions.
• Sechaba Moletsane, Director, Tsebo Consulting.

The following organisations were represented:

• The Department of Trade and Industry.
• Congress of South African Trade Unions (COSATU).
• The Federations of Unions of South Africa (FEDUSA).
• The Standing Advisory Committee on Company Law in South Africa (SACCL).
• Business Unity South Africa (BUSA).
• Portfolio Committee For Trade & Industry of Parliament of the Republic of South Africa.
• National Treasury.
• Southern African Clothing and Textiles Workers Union (SACTWU).
• National Union of Mineworkers (NUM).
• Anglo Platinum Ltd.
• Deloitte.
• Sasol Ltd.
• Association of Business Administrators of South Africa (ABASA).
• Joubert & Robertson.
• University of Pretoria.
• Banking Association of South Africa (BASA).
• Webber Wentzel Bowens (WWB).
• Association of Insolvency Practitioners in South Africa (AIPSA).
• Companies & Intellectual Property Registration Office (CIPRO).
• ABSA Bank Ltd.
• Department Of Justice & Constitutional Development.
• Association of Chartered Secretaries & Administrators in South Africa (ICSA).
• NEDBANK Ltd.
• Deneys Reitz.
• University of South Africa (UNISA).
• KPMG.
• FNB Ltd.
• WOOLWORTHS.
• Turnaround Management Association - Southern Africa (TMA-SA).
• Standard Bank of Southern Africa Ltd.
• Industrial Development Corporation (IDC).
• Corporate Renewal Solutions.
• SASBO.
• National Council of Trade Unions (NACTU).
• African General Equity Financial Solutions.
• Tsebo Consulting (Pty) Ltd.

The dti prepared a feedback document on the business rescue workshop, which it distributed on Monday 25 June.  However, the dti requested that the feedback as well as documentation distributed at the workshop be kept out of the public domain for the time being.

Corporate Renewal Solutions, as a participant in the ongoing consultation process with government regarding new business rescue legislation, wishes to respect government's wishes and this web site will therefore not comment on proceedings until such time as government has released official information in this regard.

Invitees

This closed workshop on Monday 11 June is for those parties and individuals that were invited by dti based on their submissions of comments on draft legislation received by 30 March 2007.

Issues to be discussed

• Should the South African Business Rescue regime be more ‘creditor friendly’ (in the manner of the insolvency regime) or more ‘debtor friendly’ (in the manner of turn around regimes in many other jurisdictions)?
• Who or what parties should be entitled to institute the business rescue proceedings?
• What is the appropriate triggering mechanism for a business rescue process:  Is it insolvency (or imminence of insolvency), an insolvency event, or some earlier other event/circumstance and, if the latter, how should this be defined?
• How can the process provide for adequate and meaningful consultation with stakeholders before a final decision is made to proceed with formal business rescue plan?
• What is the proper role and place of the supervisor?  What qualifications, if any, are needed?  What, if any, supervision or regulation of supervisors is needed?  To whom does the supervisor owe a duty?  Should the Bill permit performance compensation of the supervisor?
• Is it reasonable or necessary to designate some creditors as ‘independent’ for the purpose determining their voting rights in the process?
• What should the position of providers of post-commencement financing be relative to pre-commencement creditors?  Should the Bill compel suppliers, etc, to continue supplying the business under business rescue and, if so, what should the position be?
• If a business rescue calls for a fundamental transaction (i.e. scheme of arrangement, sale of substantially all the assets or undertaking, merger or amalgamation), should that transaction be exempt from Takeover Regulation Panel or continue to be subject to Panel supervision in addition to business rescue approval regime?
• To the extent that business rescue is to be judicially scrutinised, should it rely on the High Court or is a Specialist Court/Tribunal preferable and, why?
• Should there be a role for the current section 311 compromises in business rescue process?

Click on the thumbnail for an enlarged view of the most recent liquidation statistics (March 2007).

After a surge towards the end of 2006 as a result of past interest rate increases, compulsory company liquidations dropped significantly to only 4 per month during the first three months of 2007 despite expectations of an increased level during 2007.  With compulsory company liquidations serving as a lagging indicator of turnaround activity, it indicates that the turnaround management industry in South Africa is off to a slow start in 2007.

Read more at liquidation statistics.

Three events are taking place in May 2007 that can be attended to further your professional development in turnaround. 

Business rescue legislation panel discussion on 3 May 2007 at Deloitte

The programme and panelists for the two hour programme are taking shape:

• Opening remarks by the Chairman Judge Ralph Zulman.
• Panelists (about 10 minutes each)
  • The business rescue process (commencement, supervisor appointment, business rescue plan publication and approval, critical path, termination) by Jan van der Walt.
  • The supervisor (who is he/she?; need for regulation, admission criteria, exam, etc.) by John Evans.
  • Impact on banks (creditors not appointing the supervisor, shift in decision-making power away from secured creditors, Banks' secured lending base will be eroded, etc.) by Martin Leigh.
  • Impact on the liquidation industry by Hans Klopper.
  • The academic perspective (debtor-friendly company business rescue legislation vs. creditor-friendly present and future insolvency legislation, etc. by David Burdette.  
• Floor discussion - questions to panelists and open debate.  Keith Braatvedt is the additional panelist to answer legal questions. 
• Closure by Chairman.

AIPSA conference on the Companies Bill 11 May 2007

This 5-hour programme also covers draft business rescue legislation by Prof. David Burdette.

Programme: Managing a Turnaround 10 - 14 May at Wits Business School

This 5-day programme will teach you all you need to know about turnaround of underperforming and distressed businesses.

Corporate turnaround and rescue strategies workshop 28 - 29 May 2007

The purpose of the two day workshop is to give an overview of current developments in corporate turnaround and restructuring in South Africa and to further develop rescue strategies for organisations facing insolvency.

For complete information, see Turnaround events.

Version 2 of TMA-SA's comments on business rescue provisions as contained in Chapter 6 of the Companies Bill, 2007 can be downloaded at Business rescue legislation comments.  It addresses general themes about the draft business rescue legislation as a whole, key success factors for business rescue in South Africa, and comments per section of Chapter 6 of the Bill.

Version 2 contains some editing and corrections, and introduced a business rescue timeline diagram and critical path.

2007 TMA-SA Board of Directors in the picture: Gert Holtzhauzen (Chair), Lebo Moshidi, Keith Braatvedt, Zeenath Kajee, Philip Reynolds (Financial Director), Ntombi Langa-Royds (CEO), David Harding (Education & Knowledge), Nicola Meyer, Jan van der Walt (COO and Informatics), Colin Batchelor (Marketing).

At the board meeting thereafter, the chair and executive positions were filled as follows:

The 2006 year continued the downward trend from the level of 60 - 80 compulsory company liquidations experienced in the 90's, to only an average of 18 for 2006.

This is less than the 23 of 2005 and 19 of 2004.

After a surge towards the end of 2006 as a result of past interest rate increases, compulsory company liquidations dropped significantly to only 4 per month during the first two months of 2007 despite expectations of an increased level during 2007.

For more information and liquidation statistics graphs, see liquidation statistics.

Bear in mind though that liquidation statistics represent a lagging indicator of turnaround activity.  There are strong signs that the favourable financial conditions of the past few years — a strong rand, low inflation and falling interest rates — are peaking and cyclically heading for a downturn.

See turnaround market watch for more information about rising interest rates, weakening exchange rate and rising inflation.

All readers are invited to go to Business Rescue Legislation Forums for online discussion of and debate about draft business rescue legislation as contained in Chapter 6 of the Companies Bill, 2007.

One can discuss the legislation in general as well as per section of the Bill.

Registration is free and easy. 

Anybody (not only the Working Committee members ) may register and participate.

Remember to register with you name and surname as your username (otherwise the registration won't be accepted).

The draft of Chapter 6 of the Companies Bill, 2007, which deals with business rescue, was released on 5 February 2007 and can be commented upon until 30 March 2007. 

Business rescue will be largely self-administered by a company under independent supervision within constraints, but subject to intervention by a court at any time on application by a stakeholder.

Chapter 6 proposes replacing the existing regime of judicial administration of failing companies with a modern business rescue regime:

• Largely self-administered by the company.
• Management of the affairs, business and property of the company is under independent supervision, within constraints set out in the chapter.
• Subject to court intervention at any time on application by any of the stakeholders.

In particular, the Chapter recognises the interests of shareholders, creditors and employees, and provides for their respective participation in the development and approval of a business rescue plan. 

You can read about the topic at business rescue legislation, where you can download the draft legislation too.

Alternatively, you can download the Companies Bill from dti, but Chapter 6 is spread over Parts 2 and 3 of the 3 documents there.

On 6 November 2006 Ntombi Langa-Royds and Jan van der Walt of the Turnaround Management Association - Southern Africa made presentations to:

• Tshepo Mongalo (Project Manager: Company Law Review) of the Department of Trade and Industry.
• A number of directors of National Treasury.

on Improving turnaround and business rescue in South Africa - how government can contribute, and how TMA-SA can assist.

The presentation covered the following:

• Turnaround situations.
• Causes of distress.
• Turnaround strategies.
• Turnaround industry in South Africa.
• Turnaround industry driving forces.
• Turnaround industry constraints.
• Government interventions - new business rescue legislation, new Companies Act, business rescue funding, labour legislation, taxation.

Email received from National Treasury: "Thank you for taking the time to meet with us - we were very impressed with the quality of the presentations. I trust that we will work well together on a going forward basis and that we can play a part in assisting the turnaround of South African businesses".

National Treasury has requested TMA-SA to conduct a survey regarding the chances of success of the different stages in the timeline of financial distress.  The survey is being formulated.

In addition, National Treasury has requested TMA-SA to be available to play a facilitating role between a number of government departments.

The Department of Trade and Industry announced that new business rescue legislation will be promulgated in October 2007.  The dti also requested TMA-SA to make a proposal regarding business rescue legislation, including certification of supervisors.

In line with the new organisational structure, the composition of the TMA-SA board of directors have changed as follows:

Executive Directors:

• CEO: Ntombi Langa-Royds
• Deputy CEO: Jan van der Walt
• Secretary: Phillip Reynolds
• Financial Director: Karl Gribnitz
• Marketing Director: Colin Batchelor
• Operations Director: Dale Pudney
• Informatics Director: Jan van der Walt
• Education & Knowledge Director: David Harding

Non-executive Directors:

• Chair: Robin Taggart
• David Burdette
• David Gewer
• John Evans
• Garrath Rosslee
• Frans Maritz
• Patrick von Spreckelsen

CHICAGO – October 12, 2006 – An upward trend in engagements, staff size, and firm acquisition and consolidation activity in the past 12 months suggest the turnaround industry is retooling for the next surge in restructuring TMA members believe is coming by the end of 2007.

Respondents to the Turnaround Management Association’s 2006 Trend Watch Poll on the state of the turnaround industry released today at the TMA Annual Convention in Orlando included more than 200 companies that specialize in turnaround, financial advisory and consulting services.  Forty-seven percent report an increase in engagements in the past 12 months, 29 percent saw a slight decrease, and 24 percent said there had been little to no change.  This shows an up tick in business from the 2005 poll, in which 5 percent fewer (42 percent) saw an increase in business.

The revenue outlook was even more optimistic. In the poll, 54 percent expected their companies to earn more in 2006, which compares favourably to the 2005 poll, in which just 48 percent expected increased revenues that year.   Those who expect revenues to remain flat (29 percent) or to actually decrease during 2006 (26 percent) also point to a slightly improved outlook over last year’s results.

A spike in those from private equity firms and hedge funds inquiring about turnaround services points to a major change for the industry, with 35 percent of respondents naming them as sources, as opposed to 13 percent last year.  This is exceeded only by the traditional sources of banks/lenders and attorneys, with each obtaining 57 percent response rates.

A CRS Turnaround/TMA-SA co-branded paper on "Implications of new business rescue legislation for private equity in South Africa" was presented at the Private Equity Africa 2006 conference at the Sandton Convention Centre today.

It received a mention in the press as "Liquidations warning as SA interest rates rise".

The presentation has been posted on turnaround opinions section.