attachment 1.docx - 1 Introduction In instances where ones...

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1 Introduction In instances where one’s liabilities exceeds one’s assets. The law of insolvency comes to play, deeming such an individual as an insolvent person. This is to say such person propitiates to be sequestrated. Consequently, such an individual is restricted to perform certain acts that have economic effects such as holding offices, entering into contracts, selling, buying or disposing certain assets until the effluxion of sequestration. In principle, sequestration of an individual automatically comes to an end after the elapse of ten years. 1 This is also confirmed by the Insolvency Act (hereinafter the Act) 2 thereby rendering the person as being rehabilitated. However, in certain circumstances rehabilitation may be effected prior to the elapse of ten years provided that the person meets certain requirements as outlined in the Act. With that being highlighted, this assignment is intended to examine on the instances where a person can be rehabilitated before the end of ten years. First and foremost, it is worth taking note that an application for rehabilitation is not a formality. It necessitates frankness and a full disclosure of all valid facts. Furthermore, the applicant has to satisfy the court of three aspects. First, the disclosure of the circumstances that led to his or her sequestration. Secondly, demonstrates that he or she had learnt a lesson from the insolvency, and thirdly, that he or she is rehabilitated and ready to re-enter the commercial world and the economic mainstream. For the latter requirement, it is not enough that since sequestration, the insolvent had lived strictly on a cash basis. That is a propelled, natural, and intended, consequence of insolvency, and it is by no means an indication of forethought on the part of the applicant for which he or she should be commended. Therefore, we shall now deliberate on the circumstances which rehabilitation may be acquired in terms of the Act. 3 Rehabilitation in terms of the Insolvency Act Composition 1 Sharrock R et al, "Hockly Insolvency Law" (2008). 2 34 of 1936. 3 n 2.
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2 Section 119(7) read with Section 124(1) provides that a person after a sequestration order may approach a trustee to assent an application to one’s creditors in terms which all the creditors will be paid at least 50 cents in the rand. 4 The master of the High court should be given surety once satisfied that the creditors will be paid, the Master will issue a certificate in which the agreement and security is reflected. 5 After the Master has issued the certificate one can approach a competent court and apply for rehabilitation. 6 In Van der Merwe, Ex Parte , 7 the estate of an applicant was placed in a final sequestration. In order for the applicant’s estate to be assigned to him from the trustee, a rehabilitated insolvent applicant applied just before court. In casu , it was established that the estate of an insolvent person will stay in possession of the trustee up until the composition or rehabilitation.
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