ERIC LEVENSTEIN | Why 2026 is the year of the corporate reset

The delisting of industrial giants from the JSE is one of the warning signs marking corporate financial distress.

South Africa’s business rescue framework is no longer a last resort; it is becoming a strategic necessity for survival. Recent delistings of PSV Holdings and Murray & Roberts mark more than just a bad cycle for the construction and industrial sectors.

They signal a fundamental shift in how “SA Inc” handles distress. The era of corporate denial is ending, replaced by a high-stakes landscape of formal business rescues and aggressive informal turnarounds.

For too long, South African boards viewed Chapter 6 of the Companies Act as a “white flag” — an admission of failure that directors avoided until the cliff’s edge was already beneath their boots. This hesitancy has historically led to enormous value destruction as delay erodes the very liquidity needed for a recovery.

However, the success of entities such as Stefanutti Stocks, which navigated a R580m settlement and avoided formal rescue through specialised advisory intervention, proves that proactive restructuring is the only viable hedge against liquidation.

The cost of denial

The current pipeline of distress is diverse and daunting. From Daybreak Foods in the poultry sector to Prax in oil, and the ongoing sagas of Mango Airlines and the SA Post Office, the common denominator is a liquidity crunch exacerbated by sticky historical debt and high interest rates. These cases demonstrate that no sector is immune; when trading conditions tighten, the structural flaws in a business model are quickly laid bare.

The legislative intent of South Africa’s business rescue regime is “debtor-centric,” designed to provide a fresh start by compromising debt and renegotiating prejudicial contracts. Yet the process is still underutilised because of the “stigma of the practitioner”. Directors fear handing over the keys to an independent expert, viewing it as a personal indictment of their leadership.

In reality, the most sophisticated boards in 2026 are those that recognise that an independent business rescue practitioner provides the oxygen of a legal moratorium, allowing a company the breathing space to trade its way back to solvency without the constant threat of creditor litigation.

The rise of the professional ‘emergency room’

Perhaps the most significant development for investors in 2026 is the institutionalisation of the “emergency room”. The Johannesburg high court’s pilot project — the dedicated insolvency court— (Johannesburg and Pretoria) is a significant step-change. By staffing courts with judges trained specifically in insolvency and shortening hearing cycles to four week-intervals, the judiciary is finally acknowledging that in a rescue, time is the only currency that matters.

This judicial specialisation reduces the “litigation drag” that has previously seen viable companies collapse while waiting for a court date. We expect to see this model rolled out nationwide throughout 2026, providing the legal certainty that international and local creditors crave. It aligns South Africa with global restructuring hubs like London, New York and Delaware, where specialised benches ensure that corporate surgery is performed with precision rather than blunt force. For a country competing for foreign direct investment, this legal infrastructure is a critical competitive advantage.

A new frontier for distressed M&A

While the narrative around restructuring is often one of loss, for the savvy investor 2026 represents a great opportunity for distressed M&A. We are seeing a marked increase in capital-replete buyers — often private equity “turnaround” funds — acquiring high-value assets out of rescue at significant discounts. This is not merely “vulture capitalism”; it is the essential pruning required for a healthy economic forest.

This consolidation is healthy for the macro economy. It facilitates the movement of assets from “zombie” companies into the hands of those with the capital to modernise them. Furthermore, the provision of post-commencement finance (PCF) offers a preferential lifeline of funding for the distressed corporate.

By creating a structured, senior-ranking entry point for new capital, PCF allows potential investors to enter the capital stack with a level of security that traditional equity cannot offer. This “super-priority” funding is the engine room of the 2026 recovery, ensuring that businesses can keep the lights on while deeper structural repairs are made.

Importance to the SA economy

South Africa’s economic resilience depends on its ability to recycle capital and preserve jobs. Business rescue is the mechanism that prevents a temporary liquidity crisis from becoming a permanent economic scar. It supports a culture of entrepreneurship by ensuring that a single failure does not lead to a total corporate death sentence.

For boards, the message for 2026 is clear: waiting for a “turnaround in the rising tide” is not a strategy. Whether through informal restructuring or formal Chapter 6 filings, the goal is to intervene while there is still value left to save.

If creditors, banks and practitioners can work within this newly professionalised framework, we will see fewer liquidations and more “second acts” for South African businesses. The veil of secrecy is gone; the era of the strategic reset has arrived.

• Levenstein is director and head of insolvency and business rescue at Werksmans Attorneys