Rehabilitation: Ending Insolvency

An Insolvent will be considered automatically rehabilitated after 10 years have elapsed from their date of sequestration. It is, however, in certain circumstances possible to apply for earlier rehabilitation by way of a High Court application, brought in terms of section 124 of the Insolvency Act.

The Requirements  

1. Section 124(3) of the Insolvency Act requires that no claim had been proven against the insolvent estate, and at least 6 months must have elapsed since the date of sequestration. It also requires that the insolvent has no convictions of an offence under the act, and was not previously sequestrated. DO NOTE: The court may direct that a rehabilitation application is premature if the First Meeting of Creditors, and possibly also the Second Meeting, have not taken place; OR
2. In the event that claims had been proven, an application may be brought in terms of Section 124(5) of the Insolvency Act, provided that the Master had confirmed a distribution account which provides for the proven claims to be paid in full, with interest levied from the date of sequestration; OR 
3. Section 124(2) deals with a situation where the proven claims were not paid in full. The trustee's Liquidation & Distribution Account must have been confirmed, and at least 12 months must have elapsed since the confirmation. In addition to the aforementioned, 4 years must have elapsed since the date of sequestration. It also requires that the insolvent has no convictions of an offence under the act, and was not previously sequestrated; OR
4. If the previous section applies but for a prior sequestration, then at least 3 years must first have elapsed since confirmation of the trustee's Liquidation & Distribution Account; OR
5. If the insolvent was convicted of an offence under the act, then at least 5 years must elapse from the date of conviction before a rehabilitation application may be launched.

The most significant results 

1. The sequestration is brought to an end;
2. All debts of the Insolvent, which were due before the sequestration, is discharged (provided the debt was not the result of fraud);
3. The Insolvent is relieved of any disability resulting from their sequestration.

What rehabilitation will not affect

1. The right of the trustee or creditors to any part of the insolvent’s estate which is vested in, but has not yet been distributed by the trustee;
2. The liability of a surety for the insolvent;
3. The liability of any person to pay any penalty or suffer any punishment under any provision of the Insolvency Act.

Where to start?

Want to know if you qualify for early rehabilitation? Then simply contact us on 087 057 1790 or 014 592 9259 to assess your case for free!

_{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}