News
South Africa has adopted the UNCITRAL Model Law on cross-border insolvency as the Cross-Border Insolvency Act 42 of 2000.
An Act aimed at covering the insolvency of all types of entities - private individuals, companies, close corporations, and partnerships - is under consideration.
-
Companies Act 61 of 1973, Chapter XIV; to be replaced some time after 7 April 2010 by the Companies Act 71 of 2008
- Close Corporations Act 69 of 1984, Chapter IX
- Insolvency Act 24 of 1936
Personal Insolvency Procedures
Bankruptcy proceedings of individuals are currently provided for in the Insolvency Act 1936. A debtor or his/her agent may petition to the court for the debtor's bankruptcy or a creditor may petition. Creditors vote for the trustee. The Master of the Court or a magistrate presides at the meeting. The trustee must provide security for the proper performance of his or her duties and the cost of the provision of this security is a cost of the administration. Remuneration of the trustee is taxed by the Master. A debtor can also offer a composition to his\her creditors. The Insolvency Act also provides for the bankruptcy of debtors who are members of a partnership or who are spouses.
Corporate Insolvency Procedures
Liquidation (members' voluntary, creditors' voluntary and court windings up) of companies and close corporations and judicial management of companies are available in the law of South Africa. The statutes were partly based on English legislation.
Role
played by Government
The South African insolvency system is supervised by the Court and the Master of the
High Court. The Master of the High Court supervises the administration of insolvent estates.
Role
played by private sector practitioners
Private sector practitioners may act as trustees, liquidators or judicial managers. It is up to
the Master of the High Court and creditors to decide which practitioners are appointed to particular matters. There are persons who are disqualified from taking on appointments in general or specific appointments but the general criterion is that the practitioner is regarded by the Master of the High Court as a 'fit and proper' person.
The insolvency profession is still developing in South Africa and does not at present enjoy statutory recognition.
Role
played by the Court The court has a general supervising role in bankruptcy proceedings as well as making
bankruptcy orders. The court can review decisions by the Master of the High Court.
Creditors
Creditors can at a meeting vote for the appointment of a practitioner and give directions regarding the administration of a matter. There is no formal provision for creditors' committees.
Does
the insolvency system in South
Africa allow
for:
1.
|
Different
procedures for the insolvency of individuals
and the insolvency of companies? |
|
 |
2.
|
Creditors
to accept an arrangement outside of formal
bankruptcy/liquidation proceedings? |
|
|
3.
|
Priority
payment for employee creditors? |
|
|
4.
|
Priority
payment for taxation debts? |
|
|
5.
|
Automatic
disqualification of directors of failed companies
from managing other companies? |
|
|
6.
|
Recognition
of insolvency proceedings being conducted
in another jurisdiction? |
|
|
7.
|
A
government agency to undertake insolvency
administration work? |
|
|
8.
|
Some
form of licensing of private sector practitioners? |
|
|
9.
|
A
review of the remuneration claimed by an
insolvency practitioner by either a court
or other government regulator? |
|
|
10.
|
A
mandatory scale of fees applicable to insolvency
practitioner remuneration? |
|
|
11.
|
Surveillance
of the work of private sector practitioners
by a government regulator? |
|
|
12.
|
Collation
of insolvency statistics by a government
regulator? |
|
|
|
