The Rehabilitation Process

• AUTOMATIC REHABILITATION
  
  • • • • Rehabilitation occurs automatically after the expiry of a ten (10) year period from date of sequestration unless a court orders otherwise. There also exist other circumstances under the Insolvency Act in which an Insolvent can apply for rehabilitation before expiration of ten (10)  years:

• STATUTORY COMPOSITION
  
  • • • • Any time after sequestration, the insolvent may approach their trustee to accept a proposal where creditors will be paid 50 cents in the Rand and provide sufficient security, therefore. The Master of the High Court issues a certificate and the insolvent can apply for rehabilitation.
• LAPSE OF THE PRESCRIBED PERIOD OF THE FIRST ACCOUNT
  
  • • • • The insolvent may apply for rehabilitation four (4) years from the date of sequestration and one (1) year after confirmation of the trustees first estate account. has elapsed.
        • If the insolvent has been previously sequestrated (and rehabilitated) such insolvent may apply for rehabilitation only if:
        • (i) four (4) years have lapsed since the sequestration; and
        • (ii)  three (3) years have lapsed since the date of confirmation of the trustee’s first estate account.
        • If the insolvent has been found guilty of a criminal offence in his/her insolvent estate, the insolvent may only be allowed to apply for rehabilitation after four (4) years from date of sequestration and five (5) years after conviction of certain offences.

• NO CLAIMS PROVEN AFTER SIX (6) MONTHS
  If no claims are proven by creditors within six (6) months from date of sequestration, the insolvent may bring an application for rehabilitation if:
  • • • • At the time of making the application, no claim has been lodged against the insolvent’s estate.
        • The insolvent has not been convicted of any fraudulent act in relation to their insolvency; and
        • The insolvent’s estate has not been sequestrated before.

The application is brought on notice of motion with a founding affidavit. The affidavit must contain the following information:

• The applicants personal details.
• The date of the sequestration order and details of the court that granted the order.
• Details of the trustee(s) appointed.
• The reasons for the applicant’s insolvency.
• The total amount of the applicant’s assets and liabilities as at date of sequestration.
• The total amount of all claims proved against the estate (or that no claims have been proved and the dividend if any paid to creditors).
• All aspects regarding contribution must be dealt with.
• The date of confirmation of the account by the Master.
• That the applicant has made a complete surrender of his/her estate and not granted or promised any benefit to any person or entered into any secret agreement with the intention of inducing the trustee or creditor not to oppose the application.
• Whether the applicant’s estate was previously sequestrated and if the applicant has been convicted of any offense mentioned in Section 124 of the Insolvency Act 24 of 1936.
• The applicant’s assets, liabilities and earnings at the date of the application must be disclosed.
• The statement to the effect that the required notice has been given in the Gazette, the Master and to the trustee(s).
• That security has been given with the registrar at least three (3) weeks prior to the application, supported by documentary evidence.

• The insolvent individual.
• The widow of the insolvent, married in community of property.
• The estate of the deceased insolvent.

• An application for rehabilitation must be made to the court that made the sequestration order.

• Written notice of the applicant’s intention to apply for his/her rehabilitation must be given six (6) weeks before the hearing of the application to the m
• Master of the High court and the and trustee.
• If the application is brought under Section 124(1) of the Insolvency Act (statutory composition) or 124(5) of the Insolvency Act (full payment of proved claims ) then three (3) weeks’ notice must be given.
• Notice must be given in the Government Gazette six (6) weeks before hearing of the application if brought in terms of Section 124(1) and 124(2) of the Insolvency Act, and three (3) weeks before if brought in terms of Section 124(3)(a).
• Advertisement is not required if application is made under Section 124(5).

WHAT MUST THE NOTICE CONTAIN?

• The number of the insolvent estate.
• The full name and description of the insolvent.
• The date of sequestration.
• The date and time of the application and name of the court to which the application will be made.
• The grounds for the application.

The following reports must be included in the application for rehabilitation:

• Master of the High Court report.
• Trustee report.

The court can:

• Refuse an application for rehabilitation.
• Postpone the hearing of the application.
• Rehabilitate the applicant on such conditions as it deems fit.

• The insolvent may apply for rehabilitation four (4) years from the date of sequestration and one (1) year after confirmation of the trustees first estate account. has elapsed.
• If the insolvent has been previously sequestrated (and rehabilitated) such insolvent may apply for rehabilitation only if:

1. 1.) four (4) years have lapsed since the sequestration; and
2. 2.) three (3) years have lapsed since the date of confirmation of the trustee’s first estate account.

• If the insolvent has been found guilty of a criminal offence in his/her insolvent estate, the insolvent may only be allowed to apply for rehabilitation after four (4) years from date of sequestration and five (5) years after conviction of certain offences.

If no claims are proven by creditors within six (6) months from date of sequestration, the insolvent may bring an application for rehabilitation if:

• at the time of making the application, no claim has been lodged against the insolvent’s estate.
• the insolvent has not been convicted of any fraudulent act in relation to their insolvency; and
• the insolvent’s estate has not been sequestrated before.