Insolvency Law Chapter 31 Lecture Notes PDF

INSOLVENCY LAW CHAPTER 31 INTRODUCTION + SEQUESTRATION PROCEDURE  INTRODUCTION Problems with debt Individual collection //Collective collection Purpose of insolvency Insolvency Act 24 of 1936 Orderly and equitable distribution of debto...

INSOLVENCY LAW CHAPTER 31 INTRODUCTION + SEQUESTRATION PROCEDURE  INTRODUCTION Problems with debt Individual collection //Collective collection Purpose of insolvency Insolvency Act 24 of 1936 Orderly and equitable distribution of debtor’s law debt amongst all creditors Legal machinery to ensure assets liquidated Sequestration process and distributed in predetermined order of preference  INTRODUCTION CONTINUE Equal treatment of creditors Group v individual (concursus creditorium) Advantages for Stay of court and execution debtor Rehabilitation  ESTATES THAT CAN BE SEQUESTRATED - DEBTOR Person or partnership or estate of person fall within usual meaning of word, but not company or juristic person capable of being wounded-up in terms of Companies Act  VOLUNTARY SURRENDER  Who? ◦ Debtor; ◦ In community of property?  Requirements ◦ Estate factually insolvent  L>A ◦ Sufficient residue to cover cost of sequestration; ◦ Advantage to creditors  Reasonable prospect  dividend that is not negligible  better than individual process  VOLUNTARY SURRENDER Preliminary procedural formalities STEP 1Publish notice 30 days R200 liquidated claim  Requirements ◦ Qualifying creditor ◦ factually insolvent or commercially insolvent (acts of insolvency) ◦ Advantage of creditors  Formality requirements: ◦ Furnish security (cost of sequestration proceedings + cost of administering) ◦ File application + certificate from Master of High Court ◦ Lodge copy of application at Master ◦ Furnish copies  Debtor  SARS  Employees + trade unions (if applicable)  LIQUIDATED CLAIMS  Liquidated? ◦ certain ◦ determined; ◦ agreement ◦ Order of court  Not liquidated? ◦ Delivery of goods; ◦ To do something; ◦ Amount of money in dispute.  COMMERCIAL INSOLVENCY - ACTS OF INSOLVENCY (Attempts) Disposition Leaves RSA + intent to of property + 1 creditor evade or delay Nulla bona by sheriff preference/prejudice to payment of debt; group; (Attempts) Removes + Arrangements for Voluntary surrender - 1 creditor preference/ release; fails; prejudice to group; Written notice of Sale of business + inability unable to pay debt.  SEQUESTRATION ORDERS 1. Provisional – prima facie 2. Final sequestration – balance of probabilities Debtor not dispute – did creditor satisfy requirements Court’s discretion Debtor disputes – requirements met on balance of probabilities Rule nisi – debtor must show cause why not finally sequestrated FRIENDLY SEQUESTRATION Friendly creditor sion ins Act o ll u y olv f Co sta tio e – cu e r ca y – nc ex n fo r n me not e s oth itor de et d bt cre