What Does The Sequestration Process Involve

• A voluntary surrender of estate application is brought in the form of motion proceedings subject to the provisions of the Insolvency Act 24 of 1936 and in a South African High Court with the relevant jurisdiction.

A notice must appear in the following publications:

• The Government Gazette.
• A newspaper circulating in the area where the applicant resides, or if a trader, in the district where the applicant’s principal place of business is situated.

The notice must appear not less than fourteen (14) days and not more than thirty (30) days before the date of the application for sequestration.

The notice must correspond with certain requirements in terms of Insolvency Act.

• The full names of the applicant.
• The name of the court in which the application will be made.
• The date of the application.
• The period for which the applicants state of affairs will lie for inspection.

The notice must be given within seven (7) days of publication of the notice of surrender to the following parties:

• Creditors.
• Trade Unions representing the applicant’s employees.
• Employees of the applicant.
• South African Revenue Services.

In terms of Section 4(3) of the Insolvency Act, a proper statement of affairs must be completed by the applicant.

• The Statement of Affairs must be lodged with the Master of the High Court.
• The Statement of Affairs must lie with the relevant authority for fourteen (14) days.

An application for sequestration is brought on notice of motion with a supporting founding affidavit.The founding affidavit must set out the following:

• The applicants full names, address and capacity to sue indicating jurisdiction and locus standi.
• The applicant has, without fraud or dishonesty on his/her part become insolvent and that he/she wish to surrender his/her estate for the benefit of his creditors.
• That the applicant is insolvent.
• The causes of the applicant’s insolvency set out with sufficient particularity to enable the court to decide on the Applicant’s bona fides.
• Proof of publication in the Government Gazette and newspaper as required in terms of the Section 4(1) of the Insolvency Act.
• Proof of notice given in terms of Section 4(2) of the Insolvency Act.
• Certificate of the Master of the High Court confirming that the statement of affairs has lain for inspection for fourteen (14) days and whether the objection of any creditor has been lodged.
• That there are sufficient assets in the applicant’s estate to meet the costs of sequestration payable out of the free residue.
• Evidence of the likely proceeds of the immovable property and any other assets in the insolvent estate in the form of motivated sworn valuations is required.
• The valuator must confirm under oath that he/she personally inspected the assets.
• The surrender of the applicant’s estate will be to the advantage of creditors amplified by supporting facts.
• Full particulars of the amount of the applicant’s salary or other income.
• Evidence of all facts relevant to the application.

• An application for voluntary surrender is a High Court application with a supporting affidavit attested to by the applicant. An advocate will present the applicant’s case to the court on their behalf. There is no need for the applicant to be present at court.
• The court can exercise it discretion to grant the order or determine what other requirements are to be before the order can be granted.

• The relevant High Court will ensure that an order is typed confirming the voluntary surrender.
• The Master of the High Court will appoint a trustee who will handle all the financial affairs of the insolvent estate.
• The client can provide the trustee the funds needed to pay the benefit to the creditors in an instance where he/she wants to retain the moveable goods.
• It can thus be negotiated with the trustee to pay off the amount due, over an agreed period. It is not guaranteed that the trustee will enter into the aforementioned arrangement.
• If the above option is not accepted by the trustee, an auctioneer will be appointed to auction off your assets to recover the amount due to the creditors.
• The trustee will distribute the benefit to creditors as is required.

• A meeting with the trustee can be set up should same be necessary.
• A creditors meeting will be arranged which the applicant is entitled to be part of. During this meeting the applicant can assist with providing further information as is required.
• Should the applicant be interrogated in terms of the Insolvency Act he/she will be allowed legal representation. Interrogation in voluntary surrender matters are rare.
• The trustee can request that the applicant furnish further details and information post – sequestration, all of which is regulated by the Insolvency Act.

Once all creditors’ claims have been settled, the trustee will provide the applicant with a document stating that all aspects pertaining to the insolvent estate have been concluded satisfactorily.