Sequestration In Insolvency Law

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Introduction The main aim of this article is to undertake a analysis of the effect that the advantage to creditors requirement has on sequestration applications. In terms of the Insolvency Act 24 of 1936 there are two processes that a debtor may sequestrate his estate. Either by voluntary surrender of his estate or by compulsory sequestration. In both these instances there is a requirement that the granting of the sequestration must be to the “advantage of the creditors”. A discharge of debtors from debts is a something yet to be realized if the advantage requirement is not relaxed. Although the Act does not outline what constitutes an advantage of creditors, the courts have interpreted it to encapsulate a benefit to creditors. Loubser expresses a view that: “South Africa cannot remain untouched by developments in Europe and the United States of America, and the signs are there that in South African insolvency law, too, more emphasis is gradually being placed on the plight of the insolvent debtor and the opportunity he should be given to make a fresh start.” Cases Law that shows the required as a major part of our South African Insolvency Law system: 1. In Ex parte Arntzen The court rejected the application for voluntary sequestration of this estate because the court was not satisfied that the applicant owned realizable property of sufficient value to defray all costs of the sequestration which will, in terms of the Act, be payable out of the free residue of his estate. Also that that it would be to the advantage of his creditors if his estate is sequestrated. In this case we can see that the courts used this advantage to creditor requirement to decide on whether to grant this application or not. In ex parte Shmukler The cou... ... middle of paper ... ...50 000 and who can afford to pay debts in instalments. Debt review also does not provide debtors with discharge. In my humble opinion I would like to submit that I agree with the above articles discussed in that South African Insolvency Law needs a complete change to the advantage of debtors as discussed above. Clearly the advantage to creditor’s requirement has placed a stumbling block in the path of complete debt relief and a fresh start for the debtor. I submit that for the debtors that are drowning in debt a review of the systems in place is necessary if we would like to get our country back to the economically strong place that we have been in the past. For South Africa to decrease the number of people that seek these sequestration orders we have to change our processes and put other debt relief measures in place to cope with the debtors that require them.

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