A critical analysis of the applicability of corporate rescue proceedings to small and medium enterprises in Zimbabwe

Abstract

This research analyses the applicability of corporate rescue proceedings to small and medium enterprises (SMEs) in Zimbabwe. SMEs are vital to the growth and development of any developing country including Zimbabwe. The research examines the characteristics of SMEs looking into how Zimbabwe defines SMEs. The research lays out the legal framework of Zimbabwe’s corporate rescue proceedings showing clearly the demarcation between formal and informal corporate rescue proceedings. It is made clear that the more formalistic processes of corporate rescue are burdensome and would only serve to burden an SME instead of its alleviation from financial distress. The challenges faced by SMEs are made clear in chapter three which examines the challenges faced in attempting to apply the corporate rescue process to SMEs. Chapter four examines the South African insolvency provisions as they relate to SMEs identifying how the Zimbabwean insolvency procedures were largely drawn from the South African context. The chapter also identifies how the challenges in South Africa are also inherent to Zimbabwe due to the similarities within the legal system. The research concludes by proffering recommendations of what can be done to ensure that corporate rescue proceedings are SME-friendly