Insolvency, sequestration, liquidation, rehabilitation
Insolvency is the legal collective term when either an individual or a companies assets is less than the total value of that particular applicant. You are insolvent if your assets are less than your liabilities.
South African Insolvency Law allows for a few types of applications.
Voluntary Surrender of Estate: When an individual applies for insolvency
Sequestration: When someone approaches the Court to have another person declared insolvent
Voluntary Liquidation: When the director of a company approaches the court to have his/her company liquidated
Compulsory Liquidation: When a creditor approach the Court to have another company liquidated
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Insolvency, sequestration, liquidation, rehabilitation in South Africa
The application known as voluntary surrender of estate is a legal process whereby the applicant seeks on order of the High Court to be declared insolvent. The test for insolvency is as follows. Your total value of your assets must be less than the total value of your debt
If you are declared insolvent your estate will vest in the hands of the Master of the High Court
Curators will be appointed to meet with your creditors and claims need to be proved. The liquidators will also administrate your insolvent estate
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The difference between sequestration and insolvency is just terminology
Insolvency is a global term that defines a persons or legal entities status. However when talking status, it is always applied to individuals. Individuals can always apply for rehabilitation to restore their status. Businesses cannot.
Sequestration is the collective name for personal applications made to a court that will declare the applicant insolvent
The insolvency Act South Africa no 24 of 1936 id the legislation that oversee and prescribe how the process of insolvency is handled and administered.
It includes definitions of insolvency, tests for insolvency, legal proceedings when making applications, appointment of Masters, appointment of liquidators and the general rule of law
Please click here to read the insolvency act south africa
Depending on a few factors, insolvent status can range from a few months to a few years. Companies can never change their status back and remain liquidated indefinitely
If you contribute more than 50c/R1, you can apply for rehabilitation immediately once the Master of the Court has confirmed your Liquidation account
Should your contribution be the minimum or less than 50%, you can apply for rehabilitation 4 years after your L&D account has been confirmed.
Ten years after your sequestration order will automatically rehabilitate you
For the remainder of your insolvent status you will not be able to obtain finance.
Once rehabilitated you will have a clean credit record and you can start building a new credit profile. If you have been rehabilitated all your previous bad ITC listings will have been removed.
Our goal is to teach our clients the value of money management and to make sure that they never again fall into the dark spiral of bad debt
liquidation procedures for a company
what happens when a company is liquidated
steps to liquidate a company
legal consequences of liquidation
voluntary liquidation of a company
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