Faq-Liquidation

• The liquidator will require your assistance after liquidation and is allowed to contact you in this regard. The liquidator is appointed to assist you in the matter. Such appointment is done by the Master of the High Court.
• The appointment is affected by requisitions received from the creditors or by a discretionary appointment by the Master of the High Court.
• You should co-operate with the liquidator in respect of all queries and information required.

• All legal action is suspended immediately.
• Attachment by creditors made against the company/close corporation after commencement of the liquidation is void.
• The directors or members of the entity cease to be in charge. The Master of the High Court appoints a liquidator to deal with all the matters of the entity.

The Insolvency Act 24 of 1936 and schedules thereto prescribe the fees that the liquidator is allowed to charge.

The liquidators fee is determined by the types of assets found in a specific estate. The fees applicable are as follows:

• On immovable property, shares, stock, policies and mortgage bonds: 3%

• On moveable property, book debts, rent, interest and other income: 10% from the sale of movable assets.

• On cash, cheques, postal orders, current, savings and other accounts: 1%

When a company with no assets undergoes liquidation, it costs the liquidator a substantial amount to wind up the estate.

Under these circumstances clients are advised to pay the liquidator’s fee and expenses, so as to avoid the liquidator incurring losses in the winding up progress.

• When the court grants an order for liquidation, the liquidator appointed, can decide whether legal action or further legal action can be taken against a third party.
• Legal action is only suspended once the liquidation order has been granted.
• Should the liquidator not want to proceed with legal action after the liquidation order has been granted you can negotiate with the liquidator to obtain the right from the insolvent estate to proceed with the legal action in your private capacity.

• Liquidation of a company will only suspend obligations between employers and employees in terms of their contract of service.
• The suspension will become effective from the commencement of the liquidation. The immediate effect of the suspension is that employees will not be required to tender their services in terms of their contracts of employment. Consequently, the trustee is also not obliged to remunerate them in terms of section 38(2). Such employees are, however, entitled to unemployment benefits in terms of the Unemployment Insurance Act 63 of 2001.
• Section 38(4), however, empowers the liquidator to terminate the contracts of service of the employees subject to sections 38(5) and 38(7). The power to terminate may, however, not be exercised unless the liquidator has entered into consultations with the relevant parties referred to in section 38(5), such as, a registered trade union or the employees themselves with the view to receiving proposals in order to save or rescue the business or a part thereof, for instance, to save the contracts of service when the business is sold and transferred to a new owner as provided for in section 197A of the Labour Relations Act [section 38(6)].
• Unless a liquidator and an employee have agreed on continued employment in view of measures to save or rescue the business as contemplated in terms of section 38(6), all contracts of service not already terminated, shall terminate forty – five (45) days after the appointment of the final liquidator 38(9).
• In terms of section 38(10), an employee whose contract of service has been suspended in terms of section 38(1), or terminated in terms of sections 38(4) or (9), will become entitled to claim compensation from the insolvent estate of his or her former employer for loss suffered by reason of the suspension or termination of a contract of service prior to its expiration. This claim will be of a concurrent nature and may include damages, which will be the employee’s weekly or monthly salary, minus benefits received from the Unemployment Insurance Fund in terms of section 38(3). It could also include damages suffered as a result of the termination of a contract of service prior to its expiration in terms of the original terms of the contract. Claims for salary and other benefits in arrear may also be made.

• Should you have signed surety, thus agreeing to be held liable for the debt of the entity, a creditor can proceed with legal action against you in your personal capacity.
• Surety is typically signed in respect of overdrafts, business loans and credit cards.