When Business Rescue Backfires It Cost You Personally

A new court ruling has sent shockwaves through the business rescue community: Directors and Business Rescue Practitioners (BRPs) can now be held personally liable for abusing the process.

The facts of the case

The applicants challenged a business rescue resolution adopted on 16 September 2020 by Seacrest’s sole director. The decision placed the company into business rescue under section 129 of the Companies Act, just as creditors were preparing to enforce claims. The applicants argued that the move was not a genuine attempt to save the business but rather a strategy to delay liquidation and obstruct creditor rights. The court agreed, finding the company had no viable rescue prospects, its only asset had already been sold, and declared the resolution an abuse of the business rescue process.

The Court Decision

In the PH Strydom NO v Seacrest Investment judgment (4 June 2025), the court ruled that Seacrest’s 2020 business rescue filing was not a legitimate attempt at saving the company—it was a tactical move to delay creditors and avoid liquidation. The result? The entire process was declared null and void.

But it didn’t stop there.

💥 The court slapped punitive legal costs on Seacrest’s sole director and BRP—personally. The BRP’s claim that she was just doing her job? Rejected. The court found she had “materially advanced the abuse.”

Why this matters

• Business rescue must be backed by a real plan—not used as a delay tactic.

• Directors and BRPs who misuse it could be on the hook personally.

• You may need to advise clients more carefully before they consider rescue routes.

Bottom line: Business rescue isn’t a “get out of debt free” card. It’s a tool for real turnaround—not a shield from accountability.

Source Article: Werkmans