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The importance of Deeds of Suretyship for purposes of Risk Management

The importance of Deeds of Suretyship for purposes of Risk Management

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The recent spate of large companies being placed under business rescue, of which CNA is the latest, has again highlighted the fact that no company can be deemed too large to fail or suffer financial difficulties. This has brought the question of mitigation of risk to the fore. In light thereof, we have decided to write this blog post to highlight the importance of deeds of suretyship for purposes of risk management.

The traditional position was that national tenants were not required to provide deeds of suretyship. This was not only due to their size, but also their reputation as being relatively safe from the risks of financial difficulties. Over the past number of years, however, several companies were placed under business rescue, some of which led to their eventual demise. Examples like Look & Listen, Edcon, and now CNA are well-known.