Frequently Asked Questions
Find comprehensive answers to common questions about our liquidation, sequestration, and rehabilitation services.
Liquidation
The business is seen as a separate legal entity in our law; thus shareholders, directors, or members cannot be held liable for the business debt unless the shareholder, director, or member put up personal security or suretyship. The process will be conducted through a High Court application. The process of each business is unique and different.
- A company or close corporation is insolvent when the business liabilities exceed its assets. If the business conduct business while factually insolvent, the director(s) will be held personally responsible for any debt incurred.
- Whether the business is able to pay its debts when they become due and payable.
- No trading is taking place.
Sequestration
We initiate the court process, with obtaining a court date. A letter gets sent out to all your creditors to inform them that you are applying for sequestration. From that point forward you do not have to pay any creditors at all. You do not need to be present on the day of hearing. A Trustee is appointed to administer your estate. After a certain period of time you can apply for your rehabilitation. After this, you will start on a clean slate and ultimately regain financial stability.
- There is no need to appear in High Court. An advocate appears in High Court on your behalf. This is a swift and quick application.
- You get rid of all your debt, including arrear taxes.
- All debt prior to or on date of sequestration falls away.
- Your policies, annuities, pension and personal injury claims etc. are protected and excluded from your insolvent estate.
- Once sequestration is granted all garnishee orders against your salary are removed.
- Your creditors are legally not allowed to attach your income or salary.
- After 6 months or 4 years (depending on circumstances); and after final sequestration order has been granted; you can apply for rehabilitation and your credit status will be reinstated.
- You are blacklisted on all credit bureaus and cannot incur any debt until you have applied for rehabilitation.
- You will not be able to act as a member of Close Corporation or director of the Company until you are rehabilitated.
- You will be unable to have or administrate a trust account, e.g. Attorneys Trust Account, Estate Agent Trust Account.
- Certain high-profile jobs can be affected negatively and thus the company's policies and regulations should be consulted. Alternatively, our offices should be contacted prior to proceeding with the sequestration application.
Rehabilitation
Rehabilitation is the legal process by which an Insolvent (a sequestrated individual) is relieved of the legal implications of being an Insolvent and restored to the legal status of a credit worthy consumer (a "solvent").
- The sequestration order.
- Certificate of appointment of trustee.
- The Section 81 report.
- The first and final Liquidation and Distribution account (L & D).
- Confirmation letter in respect of the first and final Liquidation and Distribution account.
- Date when the first and final Liquidation account was confirmed by the Master of the High Court.
- At Any Time:
- Section 124(1): An offer of the composition of at least 50 cents in the rand to concurrent creditors is made and accepted by three-quarters of creditors in value and number.
- Section 124(5): After full payment of all proved claims. Any time after confirmation of estate account.
- Six Months: If no claims have been proven in against the insolvent estate and not previously insolvent and no convictions of certain offenses.
- Four Years: Four years from date of sequestration and one year after confirmation of the first liquidation and distribution account.
- Previously Sequestrated: If previously sequestrated, four years from the date of sequestration and three years after the confirmation of the first liquidation and distribution account.
- Five Years: If you have been convicted of a criminal offense in your insolvent estate, you may apply for your rehabilitation five years after your conviction.
- Efflux of Time: If you have not applied for your rehabilitation, you become automatically rehabilitated after ten years.
- After the process you are not insolvent anymore.
- You can be creditworthy again.
- It can be a lengthy process.