Section 128 of the Companies Act provides two options for business rescue, to rehabilitate a financially distressed company, or if that’s not possible, to ensure a better return to company’s creditors or shareholders than immediate liquidation.
The second option often calls for a full wind-down of the business, thus a structured and controlled closure that protects value, but still results in the business ceasing to exist.
But what about the space between?
In many cases, true rescue lies not in total revival or total closure, but in transformation. This is where the Ship of Theseus becomes more than just a philosophical puzzle. If a business sells its assets, changes its offering, restructures its people, or pivots into an entirely new industry… is it still the same business?
The answer doesn’t really matter.
Because in business rescue, saving the business is not the same as preserving it in its original form. Often, survival demands radical change like, selling off core assets, abandoning legacy operations, or taking on an entirely new identity. Think of Nokia: once a paper mill, later a mobile phone giant, and now a network infrastructure provider. What mattered wasn’t what they used to be, but what they were willing to become.
This is where Einstein’s wisdom applies: “We cannot solve our problems with the same thinking we used when we created them.”
Too often, directors enter the business rescue process believing that saving the business means keeping everything intact, the team, the assets, the market, even their own roles. This is, of course, a practical impossibility as business rescue is not about preservation, but rather about prioritisation. Business rescue is about what must be protected and what must be sacrificed to move forward.
Sometimes, the biggest barrier to rescue is not the creditors, or the cash flow, or the contracts. It’s the directors themselves, clinging to a version of the business that no longer works, or worse, to the control they no longer deserve.
Directors who cannot accept transformation will often derail their own rescue. They want the outcome of change, without the pain of change. They want to be seen as leaders, while resisting what leadership now demands.
In turnaround management, the paradox is clear, the business may survive, but not as the business you once knew. And if you can’t live with that truth, you may not be the one to lead it forward.