The government's plans to provide more taxpayer-funded bailouts to the SA Post Office prompted the high court to yank the state-owned enterprise (SOE) out of provisional liquidation proceedings and into business rescue. The SA Post Office becomes the fourth SOE to go the business rescue route.

The High Court in Pretoria has ordered that the SA Post Office be immediately placed under business rescue to avoid the worst-case scenario of the state-owned enterprise (SOE) being forced to close its doors permanently.

The court ruled in favour of the government, which launched a court application for the SA Post Office to take the business rescue route instead of provisional liquidation.

The ruling, delivered on Monday, 10 July, means that the SA Post Office's provisional liquidation proceedings, which were ongoing, will be immediately stopped. This paves the way for business rescue proceedings to begin.

Business rescue, provided for by the Companies Act, is an attempt to rehabilitate financially distressed companies by restructuring their affairs. The objective is to enable a company to continue operating while being restructured, temporarily suspending payments to creditors and saving some jobs.

A provisional liquidation portends a process of winding up a company, which involves its assets being sold and the proceeds from this sale being used to pay liquidation expenses and its creditors. It is usually difficult for companies to be rehabilitated and resume trading at this juncture.

The SA Post Office owes creditors more than R5-billion that it cannot afford to pay...