1. She must prove that her debts are actually more than the value of her assets.
2. She must have enough assets to pay the costs of the sequestration application.
3. She must prove that the sequestration will benefit the persons and/or businesses she owes money to i.e. they must get paid (at least something) if her estate is sequestrated.

1. The sequestrated person’s credit record will get a blow as he/she will be blacklisted at credit bureaus and lose their creditworthy status.
2. The sequestrated person can’t borrow money or incur any other debt until he/she is rehabilitated. The sequestrated person will qualify as being rehabilitated when declared as such by the Court, which can happen four years after the sequestration date or sometimes sooner. If the Court does not declare the sequestrated person rehabilitated, he/she will automatically become rehabilitated ten years after his/her sequestration date.
3. If a person’s estate is sequestrated, it may lead to prohibition of membership of certain professional bodies until he/she is rehabilitated, or even future exclusion from certain professions.

1. In the case of a natural person becoming insolvent, the person himself/herself may apply, or his/her representative.
2. Where spouses are married in community of property, both spouses must apply for voluntary sequestration at the same time.
3. The partners in a partnership who are resident in South Africa or their representative may apply for voluntary sequestration.
4. When a deceased estate is insolvent, the executor of the estate may lodge an application for voluntary sequestration.
5. The curator (curator bonis) of an estate where the individual is unable to handle his/her own affairs e.g. if the individual is mentally unfit.
6. An insolvent trust.

References:

• http://www.debtbusters.co.za
• http://www.findanattorney.co.za
• http://voluntarysequestrationprocess.co.za
• http://www.conlonlaw.co.za
• http://dlbmattorneys.co.za

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A simple way to describe liquidation is that liquidation is the winding up of a firm by selling off its free (un-pledged) assets to convert them into cash to pay the firm’s unsecured creditors. Before a liquidation application can be issued in court, a founding affidavit needs to be drafted. This affidavit will include all the details of the Applicant and / or Respondent. The Applicant is the person who wants to liquidate the company and the Respondent is the company. In the case where the Applicant is the company, there will be no Respondent. The affidavit will also include any details of the company, employees and creditors. A bond of security also needs to be signed for the purpose of the Master of the High Court.

Once the application is issued, the only people who receive this notice is the South African Revenue Services (SARS), the Master of the High Court, employees of the company and any trade unions. As soon as this is done, a Master’s certificate is obtained verifying the application, and a provisional liquidation order is granted.  A return date is then set, and all creditors are notified of the provisional liquidation through registered post and by placing the provisional order in two local newspapers. Should the Applicant’s attorneys receive no notice of intention to defend the matter, a final liquidation order is granted. The order together with the application is sent to the Master of the High Court and a liquidator will be appointed.

Sequestration is the preferred option for the individual who has exhausted all other options of resolution, and is now in a position where even if all their assets are sold, they would be left with such a high shortfall that it would be unreasonable to expect them to recover from this loss. A sequestration involves a little more administration work before a court date can be obtained. Before the Notice of Motion and Founding Affidavit are drafted, a valuer needs to be appointed in order to value the Applicant or Respondent’s estate. This needs to be done in order to ascertain whether the debtor is indeed over-indebted, and whether he / she has enough assets to provide a benefit for all creditors involved.

 In the matter of a voluntary sequestration, the Applicant will be the party whose estate is to be sequestrated. The valuer needs to value the property of the Applicant on a forced sale scale. This will be calculated by subtracting 20% of the actual value of the property.

As soon as the valuer has made an estimate for the Applicant / Respondent’s estate, a Statement of Debtor’s Affairs needs to be handed in to the Master of the High Court for inspection by all creditors. This needs to be done no less than 14 or more than 30 days before the court date. A Notice of Surrender needs to be sent through registered post to all creditors to inform them that the Statement of Debtor’s Affairs is available for inspection.

The Notice of Surrender needs to be posted in two local newspapers and the Government Gazette no less than 14, or more than 30 days before the court date. Once all of the above-mentioned requirement has been adhered to, the notice of surrender can be annexed to the Founding Affidavit and can be heard by the court, no Bond of Security is needed at this point. A sequestration can only be heard by the High Court, whereas a liquidation can be heard either by a Magistrate’s Court or by the High Court, depending on the merits of the case.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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