SEQUESTRATIONS

INSOLVENT3

SEQUESTRATION

There are basically two ways of becoming sequestrated – one is by way of voluntary surrender.

Voluntary surrender

The attorney must assist the client filling in what is known as a CM100 which is a statement of affairs and this statement of affairs must be displayed at the Magistrate’s Court where client is permanently resident or carries on business and at the offices of the Master of the High Court for a period of 14 days and prior to the lodgement as aforesaid a publication of the intended voluntary surrender must appear in the Government Gazette and a newspaper circulating in the district where the applicant is permanently resident or carries on business.  Notice of the intended application must be sent to all known creditors by way of registered post and a copy of the publication as aforesaid will be sent to these creditors advising them of the intended application to court and when and where the court application will take place. 

The matter is then set down for hearing after it is served on the Registrar of the High Court, the Master of the High Court, the employees, the trade unions representing the employees and the Receiver of Revenue.  What is crucial to the application is that the applicant must show that there is an advantage to creditors and the advantage is estimated by pecuniary measures only.  The courts these days require at least 20c in every Rand which must accrue to concurrent creditors from the free residue of the estate.

Compulsory sequestration

Compulsory sequestration is an application to court where a creditor is the applicant and the person becoming insolvent is the respondent.  The applicant must prove either that the respondent has committed an act of insolvency set out Section 8 of the Insolvecy Act, 24 of 1936.  We will explain these acts of insolvency to you during the first consultation or that the respondent is factually insolvent.  A person is said to be insolvent when his liabilities fairly estimated exceed the value of his assets fairly estimated.


The procedure to be adopted …

The applicant must confirm all the facts by affidavit and the Master must issue a certificate that sufficient security has been given for the payment of all fees and charges necessary until a trustee has been appointed.

The application must be lodged with the Master of the High Court and in addition thereto must be served on the Receiver of Revenue and other parties.  The notice of motion must set out that the applicant seeks a provisional order of sequestration determinable at a later date and also request that the court set out its requirements regarding publication, service and other related matters.

If the provisional order of sequestration is granted it will simultaneously grant a rule nisi calling upon the respondent to show cause why his estate should not be sequestrated finally.  If there is no opposition then the estate of the respondent will be finally sequestrated on the return date.  Here again the law is complicated and we strongly urge you to consult our expert, Gordon Martin, who will assist you in all these matters and will launch the application on your behalf should you be so advised.

Consequences of publication in sequestration matters

After the publication of the notice of surrender it shall not be lawful to sell any property of the estate in question which has been attached under writ of execution or other process unless the person charged with the execution of the writ or other process could not have known of the publication.

After publication of the notice in the Gazette the Master may appoint a curator bonis of the debtor’s estate who will take into his custody and take over the control of any business or undertaking of the debtor, as if he were the debtor, as the Master of the High Court may direct, including any business the debtor is licensed to carry on in terms of the Liquor Act, 1938 but subject in every case to the provisions of the Insolvency Act relating to bank accounts, deposits, withdrawals and such matters.