Insolvency Law in South Africa

Core Concepts
A Brief History
Sequestration procedure in South Africa
- Voluntary Surrender
- Formal requirements for Voluntary Surrender
- Preparation of the Statement of Affairs
- Lodging of the Statement of Affairs
- Publication of Notice of Intention to Surrender
- Notice of Intention to Surrender to various parties
- Application for Voluntary Surrender
Compulsory Sequestration
- Locus Standi
- Acts of Insolvency
- Advantage to creditors
- "Friendly" sequestrations
- Application for sequestration
- Court's discretion
Effects of Sequestration
- Deprivation of property
- Additional property falling within the estate
- Acquisition of separate estate
- Status
- Prohibited contracts
- Earning a livelihood
- Legal proceedings
Administrative Process
- Vesting of the estate in the trustee
Rehabilitation

Core Concepts

Do note: A word listed hereunder may also have another meaning besides the definition used for this article. Therefore, we will be using the words only to describe the following:

bankruptcy - when a person has been declared insolvent by the High Court.
creditor - a person, company, or institution you owe money to, such as a bank or cash loan.
concurrent creditor - a creditor that holds no security for the money owed to them, such as credit cards or personal loans.
debtor - is a person, company, or institution that owes you money.
forced sequestration - a High Court application initiated by a creditor to have you declared insolvent.
insolvency - when your total debt exceeds the value of your assets, and you've been declared bankrupt by the High Court.
insolvent - Generally, a person is insolvent when they cannot pay their debts. However, in legal terms, it refers to a person sequestrated by a High Court order.
insolvent estate - is limited to the assets of an insolvent such as furniture, vehicles, property, investments, and anything else of value, but excludes their debt.
liquidation - is turning assets into cash, which may consist of an auction or private sale.
Master of the High Court - a government institution that monitors the administrative processes of insolvent and deceased estates.
preferred creditor - a creditor such as SARS gets preferred in legislation to be paid first, above a concurrent creditor.
secured creditor - a creditor that holds security for their claim payment, such as a bondholder or pawn shop.
sequestration - the process used to declare a person's estate insolvent in the High Court, either voluntary or forced. Do note that the person's estate is sequestrated, not the person.
sequestration order - a court order issued in the High Court on application.
trustee - is a person appointed by the Master of the High Court to administer an insolvent estate on behalf of creditors.
voluntary surrender - the process whereby you apply to sequestrate yourself by surrendering your insolvent estate voluntarily.

A Brief History

In general, bankruptcy is viewed as a form of debt forgiveness. It is a concept found in different cultures over many centuries – the Romans and Ancient Greece, even the Mongols when they ruled China during the 1200's.

There is also reference made to in Judaism and the Torah, or Old Testament that Mosaic Law decrees every seventh year as a Sabbatical year. During this period, the release of all debts that Jewish community members owe is mandated. Even in the Islamic faith, the Quran directs that an insolvent person be allowed time to be able to pay out his debt.

The foundation of modern South African law remains Roman-Dutch law as introduced in the southern part of Africa approximately four centuries ago. That South Africa has a mixed legal system is aptly illustrated by its insolvency law's origin and current structure.

Roman-Dutch law, including the procedure of cessio bonorum, was introduced when the Dutch East India Company established a presence at the Cape of Good Hope in 1652. The Ordinance of Amsterdam of 1777 is still regarded as the basis of South African insolvency law.

The first local insolvency legislation was enacted under British rule. While the 1829 Cape Ordinance introduced some English bankruptcy principles, it retained certain features of the Ordinance of Amsterdam.

After unification in 1910, the Insolvency Act 32 of 1916 was passed. On 1 July 1936 the 1916 Insolvency Act was replaced by the current Insolvency Act of 1936, now in force as the principal Act. This legislation does not codify the law of insolvency but applies alongside the common law principles derived from Roman-Dutch law.

Sequestration Procedure in South Africa

The Insolvency Act, no. 24 of 1936, as amended (after this referred to as "the Act"), only provides two distinct ways for the sequestration of your estate:

Voluntary surrender is an application to the High Court in which you request the court accept the sacrifice of your estate for your creditors' benefit, also known as filing for bankruptcy or declaring insolvency;
Compulsory sequestration is when one or more of your creditors apply to the High Court for the sequestration of your estate, also known as forced bankruptcy or forced sequestration.

Although the initial procedures and requirements differ in various aspects, the eventual consequences after the applications have been granted are the same in both instances.

Voluntary Surrender

When you apply to the High Court to be sequestrated, you surrender your insolvent estate for the benefit of your creditors in return for your debt to be written off. The process is referred to as voluntary surrender in the legal community, but the public generally uses the terms "filing for bankruptcy" or "declaring insolvency."A court may accept your voluntary surrender, provided that you prove that:

Your liabilities exceed the forced sale value of your assets; and
The forced sale value of your assets will be sufficient to ensure payment of:
- The anticipated administrative costs of the insolvent estate, which include the sequestration costs set at R35,000 by case law, the trustee's fees and disbursements, the Master's fees; and
- A probable dividend of at least 20c per every Rand owed to Concurrent Creditors. A 20c dividend is currently considered a sufficient minimum benefit for concurrent creditors by case law.
Lastly, courts must be satisfied with full compliance with all formal requirements as stipulated by the Insolvency Act.

The main aim of surrendering an insolvent estate is to escape a financial situation that has become intolerable. However, even though the legislator's attitude to over-indebted consumers has changed significantly, the courts still believe that: "...the machinery of voluntary surrender was primarily designed for the benefit of creditors, and not for the relief of harassed debtors."

Your application for voluntary sequestration will not be granted unless the court is satisfied that all the stipulated formalities have been complied with and that the voluntary surrender will be to the advantage of your creditors.

Formal Requirements for Voluntary Surrender

Section 4 of the Insolvency Act sets out the process which must be followed leading up to the application for voluntary surrender of your estate.

Preparation of Statement of Affairs

The process starts with drafting a Statement of Affairs, which must be substantially in the prescribed format. In essence, a Statement of Affairs reflects the assets and liabilities of your insolvent estate and contains the following:

a list of any immovable property such as a house or empty stand, each with their estimated values;
details of any mortgages on the immovable property;
your unencumbered movable assets, such as furniture or fully paid vehicles, each with their estimated values;
Your debtors' addresses, details of each debt, including the extent to which the obligations are believed to be collectible;
all your creditors, their addresses, and particulars of each claim;
Any encumbered movable assets pledged, hypothecated, or are subject to a lien or under attachment in execution, such as financed vehicles or items pawned;
A list and description of any accounting books you used if you previously ran your own business;
a detailed statement of the cause of your insolvency;
personal information such as your full name, identity number, marital status, and your spouse's details, if applicable;
details of any prior insolvency and rehabilitation, if applicable; and
Your affidavit to verify that the Statement of Affairs, including any amount it contains, is considered accurate and correct.

Lodging of the Statement of Affairs

You must lodge the Statement of Affairs in duplicate at the relevant Master's Office and a single copy at the local Magistrate's Office for the district in which you reside. Your Statement of Affairs must lie open for inspection by creditors for 14 days during office hours, as stated in the Notice of Surrender.

After that, the Master and the Magistrate must each issue a certificate confirming the inspection period and that no objections were lodged, which must be filed with the Registrar before the court date.

Publication of Notice of Intention to Surrender

A notice of your voluntary surrender must be given by publication of a Notice of Surrender in a specified format in both the Government Gazette and a newspaper circulating in the magisterial district where you reside. The notice must include:

your full names, current address, and occupation;
the date and division of the High Court to which the application will be made;
where your Statement of Affairs will lie open for public inspection;
when the 14 days public inspection will commence, as required by the Act.

The sole purpose of the publication is to alert the creditors of your intention to apply for voluntary bankruptcy and to allow your creditors to oppose your application if they so choose. Therefore, copies of the publication in the relevant Government Gazette and newspaper must accompany the application as proof of compliance.

The publication of the notice in the Government Gazette and newspaper may not be less than fourteen days nor more than thirty days before the court date stated in the application.

Notice of Intention to Surrender to various parties

Within 7 days of the publication, you must give a copy of the notice to the following parties:

to every one of your creditors by delivery or post;
to the South African Revenue Service by post;
to your employees, by affixing a copy of the notice to any notice board, or the front gate, or front door of your business premises;
to every registered trade union that, to your knowledge, represents any of your employees by post;

Application for Voluntary Surrender

The application for voluntary surrender of your estate will be brought by Notice of Motion, supported by your Founding Affidavit, to convince the High Court that all the substantive and preliminary procedural requirements have been met.The application must be filed before the relevant court date, in strict accordance with the appropriate division's Practice Directives, to be enrolled for hearing on the court date.

Should one or more of your creditors wish to oppose the application, they must deliver their opposing affidavits before the hearing of the application or formally object by way of counsel on the day and then request a postponement to file their opposing affidavits. Upon hearing the application, the court may:

accept the surrender (in which case you are declared insolvent);
refuse the surrender (in which case you are restored to your position before the publication of the notice of surrender, which means that creditors may proceed with legal action); or
postpone the matter.

The court has exclusive discretion regarding the above, and even if all the requirements are met, the court may still refuse the application. Usually, this happens in the case of abuse of process or when the court believes there's not a big enough advantage for creditors.

Compulsory Sequestration

The second way your estate can be sequestrated is by an application for compulsory sequestration brought by one or more of your creditors. To launch a compulsory sequestration application, a creditor must have a liquidated claim of R100 or more (or, where the application is brought by two or more creditors, not less than R200 in aggregate).

Note that the word "liquidated" refers to a monetary claim of which the amount is fixed by agreement or judgment. In practice, the court will not grant an application for a meager R100 but will do for an R75,000 claim, of which at least R100 is liquidated and undisputed.The court will only consider granting the application for the sequestration of your estate if the relevant creditor has succeeded in proving:

that they have a claim which entitles them to apply for sequestration of your estate; and
that you committed a deed of insolvency as defined in Insolvency Act; or that you are factually insolvent; and
that there is reason to believe that if your estate is sequestrated, there will be an advantage for your creditors.

As a rule, the creditor's aim in such an application is to obtain at least partial payment of a debt due to them. Furthermore, the burden of proof rests exclusively on the sequestrating creditor; accordingly, you do not have to disprove any of these elements to the court.

Locus Standi

The Insolvency Act allows proceedings for the compulsory sequestration of your estate to be instituted by a creditor who has a liquidated claim of R100 or more against you; or two or more creditors who, in aggregate, have liquidated claims against you amounting to not less than R200.

The fact that a creditor holds security that exceeds the amount of their claim, such as a first mortgage bond, does not debar them from launching an application for your compulsory sequestration.

Acts of Insolvency

In practice, a creditor might have a good reason for believing you are insolvent, however, they will usually not be able to prove that your liabilities exceed your assets. If the creditor can prove that you've committed at least one act of insolvency, they become entitled to seek an order for your sequestration based on the act of insolvency, without having to prove you're insolvent. In light thereof, it is possible to sequestrate someone, even though they are technically solvent.

Any of your creditors may apply for your sequestration once you've committed an act of insolvency. It doesn't matter whether the act was directed at the relevant creditor or if it had any bearing on that creditor's affairs. Note that an act of insolvency committed by one spouse married in community of property binds both spouses to the sequestration of their joint estate.Each of the following constitutes an act of insolvency:

If you leave the Republic or depart from your dwelling with intent to evade or even just delay the payment of your debts;
If you fail to satisfy a court judgment, or if you fail to indicate disposable property of sufficient value upon demand of a sheriff executing such judgment;
If you make any disposition of your property, which would have the effect of preferring one creditor above another, or prejudice your creditors;
If you remove or attempt to remove any of your property with intent to prefer one creditor above another or to prejudice your creditors;
If you make an offer to any of your creditors to release you from any part of your debt;
If you published a notice of surrender for your estate and you fail to proceed or fail to withdraw the notice of surrender in terms of section 7 of the Insolvency Act;
If you give notice in writing to any one of your creditors that you are unable to pay any of your debts;
If you are a trader, you provide notice in the Gazette in terms of sub-section (1) of section thirty-four and cannot pay all your debts after that.

Advantage to Creditors

The court must be satisfied that if your estate is sequestrated, there's reason to believe it will be to the creditors' advantage before it may grant a final order of sequestration. "Creditors" means the general body of creditors. Therefore, the question is whether a "substantial portion" of the creditors, determined according to the number and the value of their claims, will derive advantage from sequestration.

For a sequestration to be to the advantage of creditors, your estate must, after payment of the sequestration costs, yield "at the least a not negligible dividend." The courts accepted the North Gauteng High Court's judgment in Ex Parte Ogunlaja (2011) which requires a dividend yield of at least 20 cents in the Rand. Therefore, a smaller dividend yield or no payment to creditors will result in the application being denied.

To enhance the size of your estate, you may renounce the protection afforded to you in respect of particular movable assets by section 82(6) in favour of your creditors. The trustee may then sell these assets and the rest of your property. However, even if there will be a significant amount for distribution after the costs of sequestration have been satisfied, it does not necessarily mean that sequestration will benefit creditors. A sequestration is actually an elaborate and expensive means of execution because of the costs involved. Therefore it is necessary and wise to compare the position of creditors before sequestration to what their anticipated position will be after sequestration.

The sequestration will only benefit creditors if it results in a larger dividend payment than would otherwise be the case. This would usually result from the setting aside of impeachable transactions or the exposure of concealed assets, or if it will prevent the unfair division of the proceeds from assets or some creditors being preferred to others. The court doesn't have to be satisfied that the sequestration will benefit all creditors financially, merely that there exists good reason to believe it will.

The court must be satisfied by the facts that there is a reasonable prospect which is not too remote, but not necessarily a likelihood, that some pecuniary benefit will befall the creditors.A creditor doesn't need to prove that you have any assets, provided they show you receive a substantial income of which a portion can be attached under section 23(5), or if there is a reasonable prospect of the trustee uncovering assets of significant value. The sequestrating creditor bears the onus of establishing an advantage to creditors, even where it is clear that you have committed an act of insolvency.

"Friendly" Sequestrations

Nothing prevents you from having your estate sequestrated by an amicable creditor. You may, for instance, arrange with a friend to whom you owe a debt you cannot pay that he (the creditor) applies for the sequestration of your estate based on an act of insolvency. You will, for instance, write a letter stating that you cannot repay the debt at this stage. Your friend will then apply for the compulsory sequestration of your estate on the strength of this act of insolvency.

When an application for compulsory sequestration is brought by a creditor who is not at arm's length from you, it is generally referred to as "friendly" sequestration. The mere fact that the application for compulsory sequestration is brought by a creditor who is prepared to co-operate with you or motivated partly by a desire to assist you does not preclude granting a sequestration order. An order should not be refused simply based on any goodwill between the parties.

However, this being said, the court will be mindful that when you and the relevant creditor are not at arm's length, there exists considerable potential for collusion and malpractice between the parties. Collusion is when certain involved parties agree to suppress facts or manufacture evidence to fool the court into believing that one of the parties has a cause of action or a defense. The most common examples of this malpractice in friendly sequestrations are:

reliance on a non-existent claim;
inclusion of protected assets;
overvaluation of assets;
understatement of costs to increase a projected dividend will be payable; and
requesting repeated postponements for the return date of the final sequestration order.

Sometimes a friendly sequestration application may be brought with the sole purpose of obtaining a stay in execution. The court must be mindful that you resorted to friendly compulsory sequestration rather than voluntary surrender to achieve the stay. This is because the former procedure is better suited for such a purpose as the provisional order may be obtained urgently without preliminary formalities or advance notice to creditors. It is an addition to which the process involves a less strenuous onus.

The purpose of the application may be only to obtain a provisional order which must be served on you, whereafter the subsequent proceedings will be postponed. Eventually, the case will be discharged at the instance of the sequestrating creditor. The court must consider that you may have used friendly sequestration to free yourself from your debts.

The courts have therefore accepted that they must scrutinize every friendly sequestration with particular care to ensure that the Insolvency Act's requirements are not subverted, as this will be prejudicial to the interests of creditors. In light of this, the court will require the following information from the sequestrating creditor:

full details of his claim;
evidence and documentary proof supporting the claim;
full details of your realizable assets known by the creditor.

Application for sequestration

In its sole discretion, the court may dispense with the requirement to furnish you with a copy of the sequestration application and grant a provisional order of sequestration without advance notice to you if satisfied that this would be in the interest of creditors.

An example of dispensing with prior notice will be in extreme cases of urgency or if the court deems there to be a reasonable likelihood of irreparable loss or damage if you're forewarned. addition, the courts no longer consider it permissible to grant a provisional order ex parte just because the sequestrating creditor presented clear documentary evidence, such as a nulla bona return.

Court’s discretion

The court has exclusive discretion to grant a final order of sequestration. Still, it will only consider doing so if the court is satisfied that the requirements have been met on a balance of probabilities, in the absence of the following:

independent evidence to confirm that you are, in fact, solvent;
the existence of a counterclaim exceeding the creditor's claim;
ulterior motives on the side of the creditor.

The court has an exclusive overriding discretion to be exercised upon considering all the circumstances. The court may exercise its discretion against sequestration, notwithstanding proof of an act of insolvency and the other requirements.

Effects of Sequestration

The main effects that will result from an order being granted for the sequestration of your estate are:

to divest you of all your assets; and
to deprive you of full contractual capacity.

Other consequences include possible criminal liability on your part for certain acts committed both before and during sequestration. You may also obtain relief from the effects of certain legal proceedings.

Deprivation of property

Upon sequestration, you are immediately divested of all the assets of your estate: all the property you owned at the date of sequestration and that which you may acquire during the sequestration — except for such property as you are entitled to retain as a completely separate estate. "Property" is defined as "immovable or movable property wherever situated in South Africa." It also includes a right of action unless the action is one that the Insolvency Act permits you to institute. It also includes property or the proceeds of property in the hands of a sheriff under a writ of attachment. Accordingly, only property located in South Africa and your contingent interests in South African-based properties are included in your insolvent estate.

Upon your sequestration, either by voluntary surrender or provisionally by forced sequestration, the Master of the High Court will appoint one or more provisional trustees to take charge of the estate. It is the provisional trustee's duty to collect your estate's assets. A provisional trustee has all the same powers and duties as a trustee, except that the provisional trustee may not initiate or defend any legal proceedings or sell any property belonging to the estate without the authority of the Master or the court.

If you are married, both spouses are divested of their joint estate, in addition to any separate assets falling outside the joint estate, such as inheritance that was excluded from the joint estate. Even if you are married out of community of property, the solvent spouse's property will also vest in the insolvent's trustee as if it belonged to the insolvent estate. However, the solvent spouse may reclaim such property as they prove to be theirs under section 21 of the Insolvency Act.

Until the trustee releases such property under such claim, the solvent spouse does not have any ownership; this being said, a court may at any time exclude the solvent spouse's property from the sequestration on specific grounds.

Additional property falling within the estate

Your insolvent estate will include and consist of the following, subject to certain exceptions stipulated by the Insolvency Act:

all your property at the date of sequestration, including property (or the proceeds thereof) in the hands of a sheriff; and
all the property you acquire or accrue to you during the sequestration.

Whenever you acquire possession of property that the trustee then claims, such property is, unless the contrary is proved, deemed to belong to the insolvent estate. Any property inherited by a spouse married in community of property, will form part of the joint insolvent estate, even if the will contains a provision explicitly excluding the property from any community of property.

However, if you (as an insolvent) refuse to accept property bequeathed to you, the property or benefit in question does not vest in your insolvent estate. The reason is that an insolvent merely has the competence to accept the bequest or nomination and does not acquire any right to the property or benefit until it has been accepted. By repudiating inheritance, a legacy, or insurance benefit, you may ensure that it passes to someone other than your trustee and the creditors of your insolvent estate.

Acquisition of separate estate

During sequestration, you may acquire certain assets that do not vest in your insolvent estate, such as

damages for defamation or personal injury;
a pension benefit;
income for work done or professional services rendered;
a share in an accrual; and
certain insurance benefits.

In the above cases, you may acquire an estate separate from the sequestrated estate. However, do note that your separate estate may, in turn, be sequestrated.

Status

The sequestration of your estate will impose a form of a status reduction on you, limiting your capacity to contract, earn a living, litigate, and hold office. However, the Insolvency Act does not deprive you of your contractual capacity completely, as you retain a general competency to make binding agreements. You may validly enter into any contract, provided that:

you do not purport to dispose of any of the assets of your insolvent estate; and
without the trustee's written consent, you may not conclude any contract that is likely to affect your insolvent estate adversely.

The Insolvency Act imposes certain restrictions on your capacity to contract to protect creditors. However, you may sue or be sued in your name in any matter relating to the status or any right not affecting your estate. In addition, you may claim damages for defamation or personal injury.

Prohibited contracts

You may not conclude a contract where it will affect your insolvent estate by:

disposing of any property belonging to your insolvent estate;
diminishing the value of your insolvent estate; or
affecting the contribution that you have been required to make by your trustee.

Where the trustee's consent is necessary and given or not required at all, the contract is valid and binding on the parties. Although the agreement is binding, you may not enforce performance in your favour unless the Insolvency Act states you may do so, but without an empowering statutory provision, the trustee is the proper person to enforce the claim.

If you conclude a contract with the aim to dispose of property from your insolvent estate, the contract will not be void, but it will be voidable at the trustee's election. The exception, however, is that if you sold any assets acquired after sequestration without the trustee's consent, the purchaser must prove that they were unaware and did not suspect you were insolvent, for the sale to remain valid.

The position is the same if you contract without obtaining your trustee's consent where it is required.

Earning a livelihood

The Insolvency Act states that after sequestration, you may follow any profession or occupation and enter into any employment. However, you may not be employed by, or have any direct or indirect interest in the business of a general dealer or a manufacturer.As an unrehabilitated insolvent, you are disqualified by other legislation from being any of the following:n appointed as a trustee in an insolvent estate;

a member of the National Council of Provinces, or provincial legislature or parliament;
a company director, without the court's permission;
a member of a closed corporation;
a member of the board of the National Credit Regulator;
a business rescue practitioner;
a Land Bank board member;
an estate agent or attorney with a fidelity-fund certificate;
a registered distributor of liquor manufacturer; or
the executor of a deceased estate or, possibly, the trustee of a trust. (The "possibly" here refers to the discretion of the Master.)

If your income is deemed unusually high, your trustee may approach the Master of the High Court for a contribution. A contribution is a claimable amount by the trustee in terms of section 23(5) from the income you earn. The contribution becomes payable to your trustee after the Master has confirmed the amount, which in his opinion, will not be necessary for your support or that of your dependents.

Legal proceedings

As an insolvent, you may institute the proceedings personally, without your trustee's consent:

matters relating to status, such as divorce;
matters which do not affect your insolvent estate;
claims to recover remuneration for work done;
a claim for a pension; and
delictual claims for defamation and personal injury.

With regards to costs, a distinction has to be made between costs in the High Court, versus the Magistrate's Court:

while High Court proceedings do not require security for costs unless the matter appears vexatious or reckless, the court has discretion.
Magistrate's Court proceedings, on the other hand, require security for costs.

Should you be awarded costs, it is yours to dispose of as you may so choose.

Administrative Process

Vesting of estate in trustee

The trustee's function is to collect the assets of your insolvent estate, then to realize or liquidate the assets by private offer or public auction before tending to distribute the proceeds among the estate creditors.

The trustee will give preference to the secured creditors and certain preferred creditors before dividing the remaining balance, if any, termed the "free residue," proportionately among the unsecured or concurrent creditors. If any surplus funds remaining after payment of the administrative costs and settlement of creditors' claims, the funds remaining will be allocated to the Guardian's fund for your benefit upon rehabilitation.

The legal effect of a sequestration order is to divest you of your estate and vest it in the Master, and after that, to vest in the provisional trustee upon their appointment before eventually vesting in the final trustee.Your estate will remain vested in the trustee until:

the sequestration order is discharged by order of the court; or
the acceptance by creditors of a composition in terms of section 119 of the Insolvency Act, which provides that your property will be restored to you; or
your rehabilitation order is granted in terms of section 124(3).

The estate re-vests in the Master when a trustee is removed from office, vacates his office, or dies, until a new trustee is appointed. However, if there is a co-trustee, the estate will remain vested in such a trustee.Once the assets have been sold, the trustee prepares the first liquidation account. If the proceedings have been completed and the time required has elapsed, you can apply for the rehabilitation of your estate. This can be done quickly if specific requirements are met. We recommend speaking to our attorneys to learn more about the criteria for rehabilitation.

Rehabilitation

Your insolvent status is terminated once the rehabilitation order is granted. A High Court may grant a rehabilitation order on the application within a comparatively short time of the sequestration. Usually, this occurs if the claims have been paid in full or the creditors accept an offer of composition and payment of at least 50 cents per Rand owed on the proven claims.

Otherwise, periods vary from twelve months to four years from the date of sequestration. A rehabilitation order ends your sequestration, discharges all your debts that were due before sequestration, and relieves you of every disability resulting from the sequestration. Rehabilitation does not, however, affect

the rights of your trustee and/or creditors under a section 119 composition;
the duties or powers of the Master, or that of the trustee in connection with a composition;
the right of your trustee or creditors to any part of your estate, which is vested in your trustee, but has not yet been distributed;
the liability of your sureties; or
the liability of anyone to pay any penalty or suffer any punishment imposed under the Insolvency Act.

Suppose you have not been rehabilitated by court order within ten years from the date of your sequestration. In that case, you will be deemed to be rehabilitated automatically unless a court had ordered otherwise before the expiry of the ten years.

_Copyright_{© 2023 Rohan Lamprecht. Disclaimer: The information in this article is of a general nature for educational purposes only, relevant to the publishing date. Any opinions expressed are solely those of the author and do not necessarily reflect the views or opinions of Grobler Malope Inc. The content is not intended to constitute professional or legal advice, and you are encouraged to call and consult with our attorneys to discuss your specific situation before making any decisions. Grobler Malope Inc - 087 057 1790 -}_{info@gmilaw.co.za}

Insolvency Law and Bankruptcy