South African insolvency law

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Bankruptcy in South African law refers to the reduced legal capacity status ( capitis diminutio ) imposed by the court on persons unable to pay their debts, or (which amounts to same) whose liabilities exceed their assets. The reduced bankruptcy of legal capacity requires certain deprivation of its legal capacity and essential rights, in the interest of protecting others, in particular the existing creditor general body, but also the creditor candidate. Bankruptcy is also beneficial for the insolvent, because it gives him help in some ways.

In broad and everyday terms, a person goes bankrupt when he is unable to pay his debt. In legal terms, however, the test for bankruptcy is whether or not the debtor's liability, reasonably estimated, exceeds its assets, is reasonably priced. The inability to pay the debt is, at most, just proof, and by itself, bankruptcy.

A person who has insufficient assets to pay off his obligations, even if he meets tests for bankruptcy, is not treated as bankrupt for legal purposes unless his land has been confiscated by a court order. The waiver order is an official statement that the debtor is bankrupt. Orders are given either on the debtor's own example (voluntary surrender) or in the instance of one or more debtor creditor (mandatory allowance).

The term "sequestration" should be used only by reference to one's property. This is the property of the exiled debtors, not the debtor himself. On the other hand by, both real debtor and its own debtor can exactly be described as bankrupt.

When the word "bankruptcy" is used to describe a debtor, it carries two possible meanings - good

1. that the debtor's property has been alienated; or
2. that his obligations exceed his assets.

The notion of "being bankrupt," therefore, has a broader meaning than "being lost."

Video South African insolvency law

Tujuan dari perintah sequestration

The main purpose of sequestration is to assess the orderly and fair distribution of the debtor's assets in which they are insufficient to satisfy the claims of all its creditors.

The executor of the debtor's property in a state of bankruptcy will result in one or more lenders being paid, and the rest receiving little or nothing. Legal machines operating in sequestration are designed to ensure that any asset that has been dissolved and distributed by the debtor among all of its creditors is in accordance with the preference order that has been determined (and fairly).

The law comes from the premise that, after a sequence of foreclosures is given, the concursus creditorum ("creditor combination") is established, and that the interest of the creditor as a group enjoys preferences over the interests of the individual creditor.

The debtor releases his land, and may not burden with further debt. The right of the lender to reclaim his/her full claim by the judicial process is replaced by his right, to prove claims against the bankrupt property, to share with other proved creditor in the proceeds of plantation assets.

Regardless of what is permissible in the Act, there is nothing that can be done which will impact on the reduction of real assets or prejudice to creditors' rights.

"The object of the Act," the court held in Walker v Syfret NO, "is to ensure the reasonable distribution of assets among creditors in the order of their preference [...].The order of absorption crystallizes the position of bankruptcy, the hand of the law is laid in on the land, and at the same time the general creditor's body rights should be considered No transactions can be entered into matters relating to inheritance by a sole creditor to the prejudices of the general body The claims of every lender should be dealt with as is the case on the issue of the order. "

Maps South African insolvency law

The core concept

The law provides that the "property" of the "debtor" can be absorbed.

Estate

An estate is usually described as a collection of assets and liabilities, but the debtor that has only a liability can be considered to have possessions for the purpose of absorption.

Debtor

A "debtor," for the purposes of the Act, is "a person or a partnership, or a person's property or partnership, which is a debtor in the ordinary sense of the word except the corporate body or other company or association of persons who may be placed in liquidation under the law related to the company. "

An entity or association of persons is considered a "debtor in the ordinary sense of the word" if able to own property and incur debt. An entity that can be placed in liquidation under the Company Law is

• a company;
• an "external" company; and
• "any other body entity."

"Corporate body" in this context refers to a legal person or a university.

The term "debtor" therefore includes the following:

• a reasonable person;
• partnerships (even whose members are all legal persons);
• the deceased and one unable to manage his or her own affairs;
• an external company not included in the definition of "external company" in the Company Law (such as a foreign company that has not yet established a place of business in the country); and
• an entity or association of persons who are not legal persons, such as trust.

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Court jurisdiction

Only the Provincial Division, or the Local Division of the Court of Appeal, can prosecute bankruptcy issues. (In certain cases, the Magistrates Court has jurisdiction, as in prosecution for offenses under the Act.)

In the case of section 149, the court has jurisdiction "with respect to the debtor and with respect to the debtor's property" If, on the date when the application for voluntary submission or mandatory seizure of a debtor's land is filed with a court clerk, the debtor is domiciled, or has property, or is entitled to the property, situated within the jurisdiction of the court; or

if, at any time within twelve months immediately prior to the lodging application, the debtor usually resides or conducts business within the jurisdiction of the court.

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Constitution overview

The Constitution provides the basis for the reform of all South African laws. This is the supreme law and contains the Bill of Rights, which can be used to test the validity of all laws.

Bankruptcy law represents a potential threat to a number of basic rights, such as rights to equality, freedom and security of persons, privacy, access to information, property and administrative measures.

The Constitutional Court has been called to consider the constitutional validity of certain bankruptcy provisions, such as

• section 21 of the Bankruptcy Act (enforced in Harksen v Lane NO); and
• section 66 (3) of the Bankruptcy Act (held at De Lange v Smuts NO becomes invalid so far it empowers an officer who leads an interrogation that is not a judge or judge to issue a warrant from committing to jail).

The issue of constitutional disability involves double investigation:

1. Are these provisions contrary to fundamental rights?
2. If yes, does the limitations make sense and can be justified in an open and democratic society based on human dignity, equality and freedom?

To decide the last problem, the account must be taken from all relevant factors, including

• the nature of the rights;
• the importance of the purpose of the restriction;
• the nature and extent of its limitations;
• the relationship between the boundary and its purpose; and
• do not limit the means to reach the goal.

Only if the provision is unreasonable and unjustifiable, taking into account all relevant factors, it can be deduced that it is unconstitutional.

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Blurring irregularity or non-compliance with formality

Sometimes the party making the app, or taking steps in the matter of the Act, will remove the specified details, or fail to act within the prescribed time, or commit any other procedural violation. When this happens, it is important to determine whether what has been done is invalid by reason of defects or irregularities.

The starting point is section 157 (1), stating that "nothing is done under a law which would become invalid by reason of a formal defect or irregularity, unless substantial injustice has been committed, which in the opinion of the court can not be corrected. court order. "The effect of this is as follows:

• If a formal flaw does not cause substantial injustice, the procedural step in question is valid. It is said that the court can forgive the defects in these circumstances, but this seems not true, because section 157 does not give the courts the power to forgive the defects.
• If a formal flaw has caused substantial injustice, but prejudice against the creditor may, in the opinion of the court, be remedied by an appropriate order, then the defect is not fatal - provided, of course, that the said party complies with the repair order.
• If a formal flaw has resulted in substantial injustice, and prejudice against the creditor can not be cured by a court order, then the procedural step is invalid.

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Procedures

There are two ways in which the debtor's property can be confiscated:

1. A creditor or creditor (or their agent) may apply to the court for confiscation of the debtor's property (s 9 (1)). This is called mandatory sequestration.
2. The debtor himself (or his agent) may apply to the court to accept the transfer of his property (3 (1)). This is known as voluntary submission.

The procedures and requirements for each method differ in terms of the material (although the consequences of the sequestration sequence are the same in both cases).

Voluntary submission

The petition by the debtor for the seizure of his property for the benefit of the creditor is called "voluntary surrender" of the estate. The Court may accept submission if the debtor proves, inter alia, that his liabilities exceed his assets. The purpose of the debtor in surrendering property is, as a rule, to break away from an intolerable financial position. It has been shown that "the voluntary surrender machine is primarily designed for the benefit of the creditor, and not to pay off the abused debtor." The court, therefore, must be satisfied that the surrender will be an advantage of the creditor.

Who might sign up?

The following persons may apply to submit the mentioned plantations:

• In the case of natural persons' property, the debtor himself or his agent may apply. If the agent applies, he must be expressly authorized to do so.
• In the case of a deceased debtor's property, the implementer may file an application.
• In the case of a debtor's property that is unable to manage its own affairs, the party entrusted with managing the property may apply.
• In the case of a partnership, all members of the partnership residing in the Republic, or their agent, may apply.
• In the case of joint property of a married couple in the property community, both partners may apply.

Terms

The court may accept the transfer of the debtor's property only if it is fulfilled

• that the real debtor, in fact, is bankrupt;
• that the debtor has a realizable property of sufficient value to finance all sequestration charges, which would, in the case of the Act, be payable on the free remain of the land; and
• that the warranty collateral will be an advantage of the creditor.

In addition, the court must be certain that certain preliminary formalities have been observed.

Debtor's property borrower

A debtor goes bankrupt if the total amount of his liabilities exceeds the value of all his assets.

The extent of assets and liabilities of the debtor is generally determined by reference to the affidavit that he must prepare and archive, but the court is not bound by the judgment in the statement; it may make the discovery of insolvency even when the statement indicates that its assets exceed its obligations.

The test is whether it is established that the debtor does not have the funds to pay its debt in full, and is it unlikely that the asset will be adequately realized for this purpose.

Free residue is enough to pay for ingestion costs

"Absorption costs" include fees not only to surrender but also to all general administration fees.

"Free residue" is defined in section 2 as "part of the plantation which is not subject to any preference right under special mortgage reasons, legal mortgage, pledge or right to retention." This includes the balance of the unencumbered property results after the discharge of the encumbrances.

For the purpose of calculating the amount of free residue in a plantation, therefore, the excess value of the asset burdened to the amount of load to be considered. "It is necessary," the court held at Ex parte Van Heerden, "to consider whether the surplus proceeds from immovable property, having met the mortgage bonds having preferential claims thereon, may be regarded as 'free residues' in the sense of the phrase as used in the Law. "The definition of" free residue "shall be taken to refer to a portion of a property under sequestration when disbursed, which is not subject to the right of preference. In estimating the free residue in a plantation, the surplus in immovable property value over the amount of the above mortgage bonds can be included in the forecast.

Goods purchased by debtors in installment transactions are also part of free residues, insofar as their market value exceeds the outstanding balance in terms of transactions.

A logical outcome of the requirement that the debtor should have sufficient property to meet the absorption fee is that the debtor who has no assets, only liability, can not deliver his or her inheritance.

If it is clear that the free residue is insufficient, the court must reject the request. This inadequacy can not be cured by the granting of collateral, because the collateral does not have the effect of creating assets in the debtor's property. However, if it is uncertain whether the free residue is sufficient, the court may grant the request, provided the security for the fee has been completed. Warranties in such cases are considered to eliminate uncertainty.

Determination to become a creditor's profit

The debtor must prove that the absorption will be the profits of the creditors, whereas, in an application for confiscation of creditor, the creditor must show only that there is reason to believe that it will happen. Responsibility, then, is more severe in cases of voluntary surrender than in mandatory binding cases.

One reason is that the debtor can usually be expected to provide a detailed report of his own financial position, whereas the creditor who prosecutes generally does not have access to this information.

Another reason is to reduce the risk of an ever-present debtor abusing sequestration procedures and resorting to confiscation when he holds little or no real benefit to the creditor and only gives the debtor the means to pass his liability.

Initial formality

The steps to be followed before the application to submit are set in section 4. Formal defects do not always invalidate the application.

Notice of intent to give up

The first step to be taken by a debtor wishing to surrender his land is the issuance of a notice of surrender in the State Gazette and in the newspaper circulating in the magisterial district where he lives (or, if he is a merchant, the newspaper circulates in the district where he has the place its main business). Notice must be completely in accordance with Form A, and must be stated

• the full name, address and occupation of the debtor;
• the date at which, and certain divisions of the previous High Court, the request for acceptance of submission will be made; and
• when and where the statement of the debtor will lie for examination as required by law.

The purpose of this notice is to alert all creditors of the app in question, if they wish to oppose it. Therefore notices must be published in newspapers in the usual sense. What if the newspaper was published in Hebrew and was for Jewish purposes only, as in Ex parte Goldman? The answer is that this will not be enough. The newspaper should be one that serves the public interest.

What if all the creditors are in KwaZulu Natal (KZN), but the debtor has just moved to the Western Cape, as in Ex parte Barton? The court is of the opinion that it should be published at KZN, since the aim is to inform the creditors.

Publication of the notice of submission can be proved by a declaration attaching a copy of the relevant Government Gazette and Government papers.

Deadline

Publication of notices in the State Gazette and newspapers shall be made no later than thirty days, and not less than fourteen days, prior to the date specified in the notice as the date for the hearing of the petition.

The purpose of the fourteen-day deadline is to ensure that the creditor has ample opportunity to peruse the affidavit statement and decide whether to oppose or not to oppose the application. The legislative aim in setting a thirty day limit is to ensure that debtors will not be able to give long notice, months in advance, and in this way to keep creditors from carrying out procurement and in the meantime throw all their assets. Failure to comply strictly for the time period of the third day has largely been taken to be fatal for the app. At Exparte Harmse, the court ruled that failure was a formal flaw or irregularity, as envisaged by article 157 (1), and therefore did not cancel the petition unless it caused a substantial injustice irreparable to the court order.

Notice to creditor and other party

Within seven days after the announcement of the submission notice, the debtor must provide a copy of the notice to the creditor whose address is known, and to the other party, including the employee. Compliance with this requirement can be proven by a statement (made by the debtor or by his lawyer) providing details of the steps taken.

Notice for each creditor

The debtor must send a copy of the notice to each of his creditors. The purpose of this requirement is to provide further protection to creditors who may wish to follow the application or take steps to protect their interests. Failure to do so may be fatal to the application, although the court may be prepared to forgive non-compliance with the time period.

Notices to unions and employees

The Borrower shall post a copy of the notice to any registered union representing its employees. In addition, the debtor must give notice to the employee itself. Notice must be given to the employee on the notice board, if the employee has access to the premises, or at the front gate or door of the debtor's business, and must be posted to the union representing the employee.

Notice to SARS

The next debtor is required to send a copy of the notice by post to the South African Revenue Service (SARS).

Preparation and lodging statement

Preparation statement

The affidavit mentioned in the notice of surrender shall be substantially framed in accordance with Form B in the First Schedule. It consists of the following:

• balance sheet;
• list of non-removable assets, with an estimate of the value of each asset and the detail of any mortgage on the asset - Annexure I;
• list of movable properties not included in Annex III or V (see below), specifying the value of each asset mentioned - Annexure II;
• list of debtors with residential and postal addresses, details of each debt, and estimates of the extent to which the debt is "good," or "bad or doubtful" - Annex III;
• the list of creditors, their addresses, and statements of any claims and any security held for him - Appendix IV;
• a list of all movable assets, hypothesized, subject to lien, or under an appendix in the execution of the appraisal - Appendix V;
• a list and a description of every accounting book used by the debtor at the time of notice of surrender or seizure or when he/she stops doing business - Annex VI;
• a detailed statement of the causes of the debtor's disability - Appendix VI;
• certain personal information about the debtor, including details of previous bankruptcy and rehabilitation - Annex VIII; and
• a statement, made by the debtor (or the person applying on his behalf), who verifies that the statement is true and complete and that any estimates of the amount contained therein are correctly and correctly estimated.

The Master may, upon receipt of the affidavit statement, specifically direct the applicant to possess the property mentioned therein which is judged by a sworn appraiser or a person designated by the Master for this purpose (s 4 (4)). The court may, when considering an application to surrender, request an independent assessment (Ex parte Prins & 1921 CPD 616 others). In the absence of direction by the Master or the court, the debtor is not legally required to obtain independent judgment in support of the values ​​given in his statement (if he does so unnecessarily, the appraisal fee will not be allowed as part of the sequestration fee: Ex parte Kruger 1947 (2) SA 130 (SWA)), but it can be effectively coerced into doing this if it depends on the anticipated outcome of a single asset to indicate that the absorption will be a benefit of the creditor. In Ex parte Anthony en 'n ander en ses soortgelyke aansoeke 2000 (4) SA 116 (C), it is held that an applicant who depends on the fact that he owns immovable property that can be sold for the benefit of his creditors must include evidence from an expert who proves probable result of property in forced sale (see also Ex parte Mattysen et uxor (First Rand Bank Ltd. intervening) 2003 (2) SA 308 (T) 312; Ex parte Bouwer and similar applications (supra) 388--9; Investec Bank Ltd & Otherwise Mutemeri & amp; 2010 (1) SA 265 (GSJ) 271; Other Naidoo & amp; Matlala NO & amp; 2012 (1) SA 143 (GNP) 155).

In the case of simultaneous submission of partner partnership and private estate of a partner, a separate statement of affairs for each plantation should be prepared (see 20.1). The cost of preparing a statement of affairs is part of the cost of foreclosure and, therefore, is paid out of the estate.

Lodging statement

The affidavit statement, with supporting documents, must be filed in duplicate at the Teacher's Office (s 4 (3)). If the debtor resides or conducts business in a magisterial district where there is no Teacher's Office, he shall file additional copies of statements in the district judge's office (s 4 (5)). This last requirement does not apply to debtors residing in the Wynberg, Simonstown or Bellville districts of the Western Cape. The affidavit statement should lie to be checked by the creditor at any time during office hours for the 14 day period specified in the delivery notice (s 4 (6)). At the end of the period of examination, the Master and the judge (where the statement is with him) each issue a certificate stating that the statement must be laid for review as advertised in the notice of surrender, and whether any objections are filed. with him by creditors. This certificate must be submitted to the Registrar before the application is heard.

At the Exparte Viviers et uxor (Sattar intervening) 2001 (3) SA 240 (T), the court accepts that the debtor who has made a failed attempt to surrender his land may submit the same statement he used at the beginning of the failed application, facts and reasons relevant to submission remain unchanged. In view of the court, in the absence of any provision in the Act or any other authority that provides legal restrictions against the same material facts used more than once, there is no reason why the debtor can not reuse the previous statement.

Applications to submit

Applications to submit are carried by motion notifications, supported by a written statement. The purpose of the founder's affidavit is to convince the court of substantive requirements and show that the initial procedural requirements have been met.

The application must be filed before the application; the applicant may not appear on the date of the request. It should be on the roll.

A copy of the application must be given to a "consulting party" in which the debtor is a business owner. The consultant will usually become a union. The consultant must be given a full copy of the application, not just a motion notification.

If the creditor wishes to oppose the application, he must submit the opposite written information before the appeal hearing (although they may be accepted on the day, depending on the circumstances); the debtor can then send a reply letter.

The court, upon hearing the request, may

• accept submission (in this case the debtor is declared bankrupt);
• refuses submission (in this case the debtor is returned to his position prior to the announcement of the submission notice, which means that the execution delay is no longer valid, and the creditor may execute against the debtor); or
• delayed this issue.

The court has a discretion regarding the above. In particular, even if all the requirements are met, the court still has the discretion to refuse the application, as in this case, for example, abuse of proceedings, or when it will not benefit the creditor, since there is not enough assets to cover the obligations. Another example is Ex parte Logan .

Effects of submission notice

Keep sales in execution

After the announcement of the notice in the Government Gazette, it is unlawful for the sheriff to sell any property on the estate which has been attached under an execution order, or other similar process, unless the sheriff can not find the publication. The court may, however, order the sale of the attached property to proceed if the value of the property does not exceed R5.000, and if it will benefit the creditor. Other civil proceedings may proceed. For example, writing may still be granted.

There is no set period for the duration of the ban, but it will likely continue until the day when the app is decided by the court.

Publication of notification notice has no effect on other civil and criminal processes. They can continue. Appendix to the appraisal can be done, although actual sales in execution remain.

Bonus curator can be designated

Notwithstanding the publication of the notice of surrender, the debtor is still free to deal with his property as he or she chooses. He may, for example, sell it or pass a mortgage bond on it.

As protection against debtors who dispose of their assets after issuing a notice of submission, the Master may appoint a receiver of the receipt to the debtor's property. The idea here is to prevent the suspicious debtor (suspicious, that is, to the Master) from scattering his assets.

The curator is then obliged to take the estate into his custody and take control of the business or business of the debtor, as can be done by the Master.

Real remains in the hands of the debtor, because the curator is only in the position of caretaker. He is required to open a bank account and is subject to the same terms in this case as a trustee.

Potential sequestration required

If, after publishing the notice of surrender, the debtor fails to make a statement about his affairs, or filed an inaccurate or incomplete statement in material honor, or fails to apply to the court on the specified day, and notice of surrender is not properly withdrawn, insolvency that gives creditors the right to apply for confiscation of heritage property.

No pending notification without approval

Notice of surrender, published in the State Gazette, shall not be withdrawn without the written consent of the Master. The debtor may apply to the Master for approval, and the Master is obliged to provide it if it arises to him

• that the notice was published in good faith; and
• that there is a good reason for the withdrawal.

Withdrawal shall enter into force upon the publication of the withdrawal notice, together with the approval of the Master in the Government Gazette and in the newspaper where the notice was issued.

Notice giving lapse

Notice of deviation abandonment

• if the court does not accept submission;
• if the notice of submission is correctly withdrawn in relation to the Act; or
• if the debtor fails to make an application to surrender within fourteen days after the date advertised as the date of the app hearing.

If the boner curator is appointed to take care of the debtor's assets, the control of the property shall be returned to the debtor as soon as the Master is satisfied that sufficient provision has been made for the payment of all expenses incurred by the receiver.

Court discretion

Even if the court is satisfied that the requirements have been met and that initial formalities are observed, it still has the discretion to refuse submission. The following are examples of factors that may affect a court against app rejection:

• The debt recipient shows great waste and repays the debt on an arrogant scale, even after the decision is given to him (Ex parte Logan).
• The debtor's creditors are accommodating, not pressuring him for payment, and willing to give him time or receive payments on monthly installments.
• The debtor has ulterior motives in submitting submissions: for example, to avoid paying or to defeat the rights of certain creditor (Ex parte Van den Berg).
• The debtor fails to provide full and honest report about his/her financial position.
• Debtor paper lacks some things (Ex parte Harmse), in this case the danger of overshadowing the cost of de bonis propriis.

Mandatory seizures

The second way in which the debtor's property can be alienated is by mandatory forcible seizure. While applications for voluntary submissions are made by the debtor itself, the application for sequestration shall be performed by one or more creditors.

To have the necessary position to file such a seizure application, a creditor must have a liquidated claim not less than R100 (or, where such application by two or more creditors, not less than R200 in aggregate). The Court may grant an application for the seizure of a debtor's property, and the applicant's creditor has proved,

• that the applicant has made a claim which grants him the right, in the case of section 9 (1), to file an application for confiscation of the debtor's property;
• that the debtor is actually bankrupt (which would require the applicant to have access to the state of the debtor), or has committed an "insolvency act;" and
• that there is reason to believe that it will benefit the debtor's creditors if his land is confiscated.

The purpose of creditors in such applications, as a rule, to get debt payments, or at least partial payments. The responsibility for fulfilling the trials of these three matters depends on the creditors who charge: There is no obligation to the debtor to refuse any element.

Locus standi

Section 9 (1) allows the process for the mandatory sequestration of a debtor estate to be instituted by

• the creditor (or his agent) who has a liquidated claim against the debtor of not less than R100; or
• two or more creditors (or their agents) that have aggregate liquidated claims against the debtor of not less than R200.

The fact that the creditor holds a guarantee for his claim does not prevent him from filing an application, even if the security value exceeds the claim amount.

The agent applying on behalf of the creditor must be authorized to do so. Lack of authority can not be cured with ratification after the application is launched.

Claims that are liquidated are monetary claims, whose amount shall be determined by agreement or judgment.

Bankruptcy law

Although the creditor may have a strong reason to believe the debtor is bankrupt, he or she will usually not be able to prove that the debtor's liabilities exceed his assets. However, if the creditor can establish that the debtor has committed one or more "actions" of bankruptcy, he may seek an order to seize the debtor's property without having to prove that the debtor is bankrupt. Therefore, the real debtor can be seized even though technically it is a solvent.

Bankruptcy proceedings do not need to be done vis-¬ -vis exorbitant creditors. Section 9 (1) gives any debtor creditors the right to apply for seizure after the debtor commits an insolvency action - whether the debtor directs the action on the relevant lender or is intended to have a relationship with the creditors' affairs.

An act of bankruptcy committed by a spouse in marriage within the property community operates as an act of bankruptcy by both partners, and is therefore a good basis for sequestration of joint property.

Bankruptcy action can be proved and relied upon even though it is contained in communications that would normally have the privilege of disclosure, such as bids marked "without prejudice."

Performing a defined insolvency action

s 8 (a): Absen from Republic or Residence

The law stipulates that the debtor has committed insolvency "if he leaves the Republic or, outside the Republic, remains absent, or leaves his or her place of residence, in order to do so in order to avoid or delay his debt repayment."

The creditor must establish the debtor's intention to avoid or delay the payment of his debt. Proof of departure or absence is not enough, because there may be other reasons (work, for example) why did he leave.

The factor from which the intention to avoid or delay payments can be concluded is that the debtor makes an appointment to make the payment and then leaves without looking after it. In Abell v Strauss Abel appealed to seize the property of Strauss, a taxi driver, on the grounds that he had committed insolvency in section 8 (a), for he had left his place of residence with the intent of avoiding or delaying repayment of his debt. The Court considers that the frequent absence of Strauss from his residence may be attributed to the demands of his job as an intention to avoid payment. In view of the court, it can not be concluded that Strauss had committed the alleged insolvency act.

In Bishop v Baker, lenders state that the debtor has left South Africa with the aim of avoiding or delaying its debt repayments. He had sailed from Durban to New Zealand, and had sold his property and furniture before doing so. The debtor alleges that he has left because his doctor has advised him to go to prevent his medical condition deteriorate further. He is constantly undergoing medical and surgical treatment because of being bitten by a dog, and is embarrassed by his disability. Furthermore, her daughter lives in New Zealand. The court accepted the debtor version. It is not satisfied that the "foreclosure action" is proven. The temporary order command is dismissed.

In Urban Salzman v Van Rooyen, the debtor, a company director, went to another city (Cape Town) as if to visit his wife, who fell ill there. However, prior to his departure, he appoints another person as a co-director to run the business of the company, disposes of office equipment, and stops the rent of the premises in which he has lived. He did not give an address where he could be contacted in Cape Town and, shortly after arriving there, resigned from his position as director. After that, he ignored the letters relating to business matters addressed to him. The Court ruled that its conclusion can not be denied that it intends to avoid payment.

s 8 (b): Failed to satisfy the rating

The law provides the following:

If the court has given judgment against him and he fails, at the request of the officer whose duty is to carry out the judgment, to satisfy or to show the disposable property officer enough to satisfy him, or if it arises from the return made by the officer that he or she has not found a disposable property that is sufficient to meet the rating.

This section creates two separate insolvency actions:

• where the debtor, at the request of the sheriff, fails to comply with the rating or to show sufficient disposable properties to satisfy them; and
• where the sheriff, without handing over a letter to the debtor, fails to find enough disposable properties to satisfy the judgment and declare this fact in return.

The second action applies only if the former can not be established: that is, only if the letter can not be served privately to the debtor. If the sheriff, in serving the warrant, ignores the request of satisfaction from the warrant by the debtor, and then states in his return that he can not find a sufficient disposable property, no insolvency measures are performed (Nedbank v Norton).

The judgment shall be against the debtor on his or her behalf and not, for example, on behalf of a sole proprietor. The judgment should not be obtained by the deporting creditor, however; the creditor may alienate the debtor on the basis of return of bona nulla on a warrant issued on another creditor's example, provided that the latter has not, temporarily, been paid.

A request to fulfill the debt of judgment must be made from the debtor, or from his authorized agent. In other words, personal service is required; requests made for other parties, such as the debtor's wife, are not enough.

"Disposable property" includes any property that may be attached and sold in execution, either movable or non-transferable.

s 8 (c): Disposition adverse to the creditor or prefer a creditor

The law provides that the debtor performs an insolvency act "if he makes, or attempts to create, any disposition of his property which has, or will, the effect of his creditor's prejudice or prefer one creditor above another."

This subsection envisions two sets of circumstances:

• the actual property disposition; and
• a property disposition attempt

.

If there is an actual disposition, it must have a debtor creditor's prejudice effect or prefer one creditor over another. If there is a business disposition, it should be such that it will, if completed, have the same effect.

"Dispositions" are broad enough to cover both contracts in which the debtor undertakes to dispose of property and delivery of the real property next.

Only disposition effects need to be considered. It does not matter whether the debtor makes a deliberate disposition to support one of his creditors, or carelessly, regardless of the consequences. The state of the debtor in making the disposition irrelevant.

A debitor takes an insolvency action where, for example, he refuses to fulfill one debt while paying another debt, or sells assets substantially below his market value while failing to meet the debt due.

s 8 (e): Setting offer

A debitor takes an insolvency action, pursuant to the Law, "if he makes, or offers to make, any arrangement with his creditors to release him in full or part of his debt."

Arrangement or offer qualifies as an insolvency action in this paragraph only if it indicates the debtor's inability to pay its debts.

If the debtor offers, by way of settlement, a lower amount than claimed, and denies any obligation at all, or debates the amount of debt, he does not commit bankruptcy proceedings, as it does not appear from his offer that he can not pay the debt.

On the other hand, if the debtor offers a lower amount of settlement and expressly or with implications of admitting that he owes the full, he takes an insolvency action, because he secretly acknowledges that he can not repay the debt (Laeveldse Co-operative Mr. Joubert).

The debtor does not have to make arrangements or offer them personally. Made by a third person with his knowledge and permission is sufficient.

The regulating or bidding object shall indemnify the debtor from liability, in whole or in part. Bids of a certain amount on the rand, subject to debtors who are allowed an extension to pay off balance, not as much as bankruptcy proceedings.

s 8 (g): Notice of inability to pay

"If he gives written notice to one of his creditors that he can not pay his debts," the debtor, pursuant to the Act, takes an insolvency action.

Notice must be in writing. The Borrower does not commit this bankruptcy act by notifying the creditor verbally that he or she can not pay its debts, even though it gives the creditor the true proof of bankruptcy.

The words "one of his debt" should be interpreted as meaning that the debtor takes an insolvency action if he gives notice of an inability to pay a single debt.

The court sees whether a reasonable person in the recipient's position, having the same knowledge of the relevant circumstances, will interpret the document means that the debtor can not pay its debts.

Unless the recipient knows, or should know that the document does not really reflect the debtor's intentions, he will not use the debtor to deny that he made an inappropriate choice of words.

A typical example of this bankruptcy action is when a debtor writes to a creditor informing him that he is not in a position to pay his debt for a while, and offers to pay it in installments.

s 8 (h): Inability to pay the debt after the business transfer notice

A debtor commits an act of insolvency, in the case of this provision, "if (becomes a merchant) he gives notice in the Gospel in respect of s 34 (1) of his intention to divert his business and thereafter unable to repay all debts."

Article 34 (2) provides that, as soon as notice is issued, any liquidated liability from the merchant in respect of his business which will mature on an upcoming date shall mature immediately if the creditor of interest demands payment.

The term "debt" here includes debt owed immediately for reasons of this paragraph.

Evidence of the inability to pay one debt can be accepted as evidence that the debtor is unable to pay all his debts, but the evidence that the debtor is unwilling or refuses to pay a particular debt is not sufficient to establish this bankruptcy action.

The reason for believing that ingestion would be an advantage of the creditor

Before a court can grant the final order of warranty seizure, it must be ensured that there is reason to believe that it will benefit the creditor if the debtor's property is alienated.

"Creditor" means all creditors, or at least a general creditor body. The question is whether "most" creditors, determined according to the value of claims, will benefit from sequestration. Some may not benefit - they may even be harmed - but most should not.

For sequestration is for the benefit of the creditors, it must produce "at least a non-negligible dividend." The court has received a different amount as "not negligible" - five cents in Rand is considered sufficient in one case, ten cents is considered insufficient in one case; at Ex Parte Ogunlaja (2011), for the North Gauteng High Court, at least 20 cents in Rand.

If, once the sequestration charge has been met, there is no payment to the creditor, or only one that is negligible, no profit.

To increase its real size, the debtor may renounce its creditors from the protection granted by section 82 (6) in respect of certain movable assets so that these assets may be sold in conjunction with the remaining properties.

The fact that there will be a significant amount of distribution after the sequestration charge has been met does not necessarily mean that absorption will be a benefit to creditors. Waivers are, in a sense, merely a complicated execution tool and, because of their cost, are costly as well.

It is important to compare the position of the creditor if there is no sequestration with his position if there is a guarantee seizure. Assignment will only benefit the creditor if it will result in a larger dividend than it should have been - for example, through implied transaction allowance, or the exposure of a hidden asset - or if it will prevent an unfair share of the assets of some creditor favored by others.

The court should not be satisfied that the foreclosure will benefit creditors financially, there is only reason to believe that it will be: "The facts presented before the court must satisfy him that there is a reasonable prospect - not always a possibility, but a not-so-distant prospect - some financial benefits will result in creditors. "

There is no need to prove that the debtor has any assets, provided that it is shown that the debtor is receiving income which substantial portion is likely to be available to the creditor under section 23 (5), or that there is a reasonable prospect that the trustee, by applying the machine of the Act , will extract or recover assets that will generate financial benefits to the creditor.

The liability to benefit the creditors remains with the creditor who is alerting, even if it is clear that the debtor has committed insolvency.

Friendly ingestion

Nothing prevents the debtor from owning a heritage confiscated by a friendly lender. The debtor may, for example, arrange with a friend to whom he owes, and who can not afford to pay, that he (the debtor) will commit bankruptcy proceedings. (He will, for example, write a letter saying that he can not fulfill the debt.) The friend will then file a request for security for the actions of this bankruptcy. Requests for mandatory sequestration brought by creditors not within the bounds of the arm are usually referred to as "friendly" sequestration.

The mere fact that the application for the guarantee seizure shall be brought by the creditor who is ready to cooperate with the debtor, or who is motivated in part by the desire to assist the debtor, does not preclude the waiver of the waiver. Orders should not be rejected simply because there is goodwill amongst the parties.

Courts should be careful, however, that, where debtors and creditors in the foreclosure process are not long enough, there is great potential for collusion and malpractice. Collusion consists of agreement between the parties to suppress facts or make evidence to make it appear to the court that either party has a cause of action or defense. An example of malpractice that usually appears in friendly squestrations is

• depends on the missing claim;
• the inclusion of protected assets;
• over-valuing assets;
• underestimates the cost, to convince the court that significant dividends will be paid; and
• the repeated extension of the return date for final sequestration.

Friendly sequestration applications can be performed with the sole purpose of obtaining a delay in execution. Debtors make friendly compulsory imprisonment rather than voluntarily surrender to reach a period of stay because the previous procedure is more suited to its purpose. This can be obtained on an urgent basis and with no initial formalities or prior notices to creditors. This involves less severe onus. The result of this application is, initially, only a temporary order that should be serviced to the debtor and may be postponed and then dismissed at the time of the creditor in power. A debtor may even use a friendly sequestration as a method of liberating himself completely from his debt.

Courts have accepted that they should, as a matter of policy, examine any arbitrary arbitrariness with special attention to ensure that the requirements of the Act are not subverted, and that the interests of creditors are not prejudiced. In particular, the court must require in each of the following cases from the deporting creditor:

• the full details of his claim;
• documentary evidence stating that he had actually made the guesswork; and
• full details of the debtor's debitable assets.

Applications for sequestration

Prior to adjudication on the application, the applicant must provide a copy of the application to the debtor. The Court may, at its sole discretion, issue this requirement and make a temporary order of sequestration without prior notice to the debtor if satisfied that this will be in the interest of the creditor or debtor.

One suggestion is that the court will be justified in issuing with prior notice only in cases of urgency, where there is a reasonable possibility of irreparable harm to the application if the debtor has been warned about the upcoming application.

It is no longer permissible for the court to grant ex parte orders only because the applicant has clear documentary evidence, such as the return of bona nulla.

Court discretion

Even if the court is satisfied that the requirements have been set on the balance of probabilities, it is not bound to give the final sequence of sequestrations:

• The debtor may produce independent evidence that he is, in fact, a solvent.
• The debtor may have a counter-claim against the creditor.
• The creditor may have ulterior motives. (Not only is the debtor important, therefore the court must uphold justice and justice on both sides.)

In each case, the court has a very important policy, which must be exercised on account of all circumstances. Therefore, the court may exercise its discretion against confiscation, despite evidence of insolvency and other requirements.

src: www.kitschdesign.co.za

Effects of the sequestration sequence

The main effect of the sequence of absorption is

• to release all of its bankrupt assets; and
• to revoke the bankruptcy of full contractual capacity.

Other consequences include criminal liability to a bankrupt party for certain acts committed both before and during the security seizure. Persons who are bankrupt may also be liable for the effects of certain legal proceedings.

Property deprivation

The bankrupt person waives all his property: that is, all his possessions on the date of foreclosure and which he can obtain during the confiscation of a deposit - unless such possessions as a bankrupt person shall be entitled to defend as a separate treasure. "Property" in this context is defined to include "movable or immovable property wherever located in South Africa." This includes the right of action, unless the action is an act committed by the insolvent to institutionalize. It also includes an existing property, or property results located, in the hands of a sheriff under an attachment warrant. The insolvent property includes the contingent interest in the property, apart from the contingent interests of an heir or legatee fideicommissary.

This plantation holds one or two guardians chosen by the creditors, and whose appointment is confirmed by the President of the Court of Appeal. Guardianship acquires dominium of all plantations, but the ownership is merely a nuda proprietas . The trustee does not earn favorable interest on the property. The trustee, in a sense, the agent of the people who are actually interested in the treasure: that is,

• creditor; and,
• if there is a surplus after satisfaction of the creditor's claim, the insolvent person, who has residual rights on the estate.

It is the duty of the trustee to collect and liquidate the housing assets, and to distribute the proceeds among the creditors of the property, giving preference to the secured creditors and selected creditor, and to divide the balance, if any, of so-called "free rest," proportioned among unsecured or concurrent creditors. If there is a surplus left after the sequestration fee is paid, and once all creditors are satisfied, it is returned to the bankrupt.

When joint treasures of married couples in the property community are set aside, the two divestiture pairs on common ground and each separate asset fall outside the combined plantation.

If the bankrupt person marries from the property community and the spouse does not live separately under the separation of the court order, then the solvent's solitary confinement is also a vest in the bankrupt trustee as if it belongs to the insolvent. Solvent pairs can regain such property as it proves to be his own. Until such property is released by the guardian on the basis of such claim, the solvent pair does not possess ordinary ownership power. The court may, either at the time of giving a waiver order or at a later stage, exclude the solvent solvent property from foreclosure operations for any reason.

Property falls within the estate

What is included in the estate? Subject to certain exceptions that flow from the Act, a bankrupt estate consists of the following:

• all belonging to the person who went bankrupt on the date of foreclosure, including the property (or the proceeds thereof) in the sheriff's hands under the warrant attachment; and
• any bankrupt property acquired or acquired during the foreclosure, including a bankrupt property recovered for estate purposes in which the guardian failed to take the necessary action.

In the case of section 2, "property" means movable or immovable property wherever located in the Republic, and includes contingent interests in the property. Assets located outside the Republic are not included - even if, if the debtor is domiciled within the jurisdiction of the court, the seizure order releases it from all of its movable property, wherever located.

When a bankrupt person has owned property claimed by a trusted party, it is considered to be a property of a bankrupt estate, unless otherwise proven. However, if a person who becomes a bankrupt creditor after sequestration alleges that a particular asset does not belong to the estate, and claims the right to the asset, it is deemed not to belong to the estate unless proven otherwise.

Legalization of joint property makes both partners "debtor bankrupt" for the purpose of the Act, with the consequence that both of them (consisting of their shares in joint plantations, as well as separate property) vest in trustee and available to meet creditor claims. Thus, property inherited by a spouse to marriage within the property community is part of a bankrupt property, even if the will contains special provisions that exclude the property of any property community.

Treasures inherited by a bankrupt person during his bankruptcy fall into his bankrupt property, despite provisions contrary to a will. However, if a bankrupt person refuses to accept property inherited to him or an insurance benefit that has been nominated as a beneficiary, the property or benefit in question does not exist in his or her inheritance. The reason is that the bankrupt only has the competence or the power to receive an inheritance or nomination, and he does not get the right to property or benefit until he receives it. Therefore, a bankrupt person may reject inheritance, inheritance, or insurance allowances, ensuring that he is left to someone other than the trustee and creditors of the bankrupt property.

The property of a bankrupt person, where marriage is outside the property community, is also a vest within the trustee of a bankrupt property, until it is released by the trustee.

Also part of a bankrupt estate is a liquor license and right of action (not private).

Status

Validity of the debtor's property imposes on him a form of status reduction, which limits his capacity to contract, to earn a living, to file lawsuits and to hold office. The law does not eliminate debtors from their contractual capacity in general; he retains the general competence to make binding agreements. The bankrupt can legally enter into any contract,

• provided that he does not intend to dispose of any of the assets in a bankrupt property; and
• provided that it is not permitted, without the written consent of the trustee, terminating any contracts that are likely to adversely affect the bankrupt property.

To protect creditors, the Act imposes certain restrictions on the capacity of debtors for contracts. Absorption, then, does affect the capacity of the contract in which it will affect a bankrupt estate

• remove any property in a bankrupt estate;
• decreases

  Source of the article : Wikipedia