Insolvency Simplified

Debt & Insolvency

Insolvency Lawyers | South Africa

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Debt Relief Through Voluntary Sequestration

Declaring Insolvency

A debtor wishing to be declared insolvent can do so with the help of an insolvency attorney. The attorney will assess the debtor’s assets and liabilities to determine whether he is indeed insolvent or if he should simply go for debt review or business rescue.

Once insolvency is established, the attorney will send notices to all of the creditors in the estate informing them of the application which will be brought before the court to declare the debtor insolvent.

As soon as the debtor is declared insolvent, any and all court action by his creditors, which has not been finalised, against him is stayed or prohibited while the debtor’s estate becomes liable to pay creditors from whatever is left in the estate.

Specialist Insolvency Lawyers

Insolvency Attorneys On Call

ANDRIES SCHOLTZ

Tel: 012 110 4211

Andries earned his B. Proc degree and post graduate Dip. Insol. (AIPSA) from the University of Pretoria. He is an experienced litigation attorney with one of his main areas of focus being sequestrations and liquidations.

JP VAN NIEKERK

Tel: 021-976 3194

JP van Niekerk obtained his BA (hons) LLB LLM from Stellenbosch University in 1987 and an LLM from Unisa. He is a Director at Smit Kruger, has been admitted as an advocate and has right appearance in the High Court.

Grave Consequences Of Ignoring Creditors

Judgement Debt

A creditor can legally attach a debtor’s property which is then sold on auction. Should the money from the sale of the property not cover this debt, the debtor remains liable for the shortfall as well as all debt payable to other creditors. Since a judgement in favour of a creditor does not prescribe for thirty years, the debtor remains liable for practically the rest of his life to pay off that creditor.

The creditor’s ex parte application means that the debtor need not even be informed of the application to have his assets attached and sold. Creditors can furthermore apply for a debtor’s sequestration if the debtor commits an act of insolvency such as admitting to being unable to pay debts, getting rid of assets to the detriment of his creditors or leaving the Republic with the intent of delaying or evading the payment of his debts.

Debt Relief Options

Sequestration & Liquidation

Sequestration

A person who is declared insolvent by an order of the High Court is placed under sequestration creditors then have to claim from the insolvent estate through a curator and no longer from the debtor directly. It means that the debtor won’t be plagued by creditors claiming outstanding debts or the sheriff showing up at his doorstep. Sequestration is done either voluntarily by a debtor or petitioned by his creditors.

Liquidation

A company or CC can be wound-up voluntarily or by way of a Court order. A creditor applying to the Court for a liquidation order has to prove that the debtor’s business rescue proceedings had failed or that it is otherwise just and equitable that the juristic debtor be liquidated. When placed under final liquidation, creditors can claim against the liquidated entity. Unless personal surety was provided, the company’s executives are not personally liable for its debt.

Insolvency & Bankruptcy Lawyers

Debt Relief & Restructuring

Debt Review

A debtor may only apply for debt review if he is over indebted, has a steady income and is able to pay his necessary monthly expenses as well as his debts as lowered by the debt rearrangement agreement.

Business Rescue

A company in distress can be placed under business rescue to facilitate the rehabilitation of the company subject to a moratorium on the rights of creditors against the company, regarding its assets.

Insolvency

Insolvency is the incapacity to pay one’s debts when they become due in the ordinary course of business. Declaring insolvency is an effective way for a debtor in financial trouble to dispose of his creditors.

The Process To Being Declared Insolvent

Sequestration Process

 

A debtor wishing to be declared insolvent should approach a knowledgeable insolvency attorney to assist in the process which entails:

01. Assess

The attorney will need a list of the debtor’s assets and liabilities to determine if the debtor is indeed insolvent or whether he should rather be referred for Debt Review.

02. NOTICES

The attorney will then notify all of the creditors in the estate, informing them of the application which will be brought before the court to declare the debtor insolvent.

03. STAYED

Once the debtor is declared insolvent, any and all Debt Recovery and court action by his creditors, which has not been finalised, against him is stayed or prohibited.

Statistics Of Liquidations And Insolvencies

Liquidations in South Africa

The total number of liquidations in South Africa have shown a gradual decline of 22% overall for the 5 year period from 2013 (2374) to 2018 (1845) according to Statistics SA.

%

2013 - 2018

Liquidation & Sequestration Lawyers

Sequestrations Options

Debt Relief

Debt Rescue

Insolvency

Sequestration

Business Rescue

Liquidation

Insolvency & Bankruptcy

Insolvent Estates

A debtor, whether a juristic or natural person, is technically insolvent when its liabilities exceed its assets and is unable to pay its debts which are due and payable. A debtor can also commit certain acts of insolvency upon which he will be regarded as being insolvent.

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