What You Need to Know When You Declare Insolvency
Both natural and juristic persons can declare insolvency in South Africa. Natural persons declare insolvency in terms of the provisions of the Insolvency Act 24 of 1936. Juristic persons (companies, close corporations, partnerships, etc.) declare insolvency in terms of the Companies Act 61 of 1973.
When Should You Declare Insolvency?
A debtor who is indebted to the point where they cannot satisfy the claims of all their creditors may declare insolvency and ask to be sequestrated by the appropriate court. The individual asks the court to sequestrate them, acknowledging their inability to repay their debts and seeking protection from their creditors. Other interested parties, usually the debtor’s creditors, may also apply for the sequestration. The main purpose of such an order is to secure an equitable distribution of the debtor’s assets among all his creditors.
When a company declares insolvency, it means that the company is unable to pay its debts as they become due. Liquidation may be voluntary or at the request of a creditor. The business may be placed under business rescue which is a process designed to facilitate the rehabilitation of a financially distressed company by providing for temporary supervision of the company and the management of its affairs, business, and property by a business rescue practitioner.
A company may be liquidated without undergoing business rescue. If the process fails, a liquidator is appointed to sell the company’s assets and distribute the proceeds to creditors according to the Companies Act’s prescribed order of preference. The company ceases to operate, and its assets are sold to pay off creditors.
Insolvency law can be complex and vary depending on the specific situation the debtor finds themselves in. So, it’s crucial to seek professional advice from an experienced attorney before making any decisions.
Choosing an Insolvency Practitioner When You Declare Insolvency
If you are on the verge of declaring insolvency, it’s important to consider a few key factors to ensure you find a reputable and reliable professional to guide you through the process.
- When choosing an insolvency practitioner in South Africa, look for a firm of attorneys specialising in all matters related to insolvency and more specifically sequestrations and liquidations. Make sure they have the necessary qualifications and experience to handle your specific situation.
- Ask for recommendations from trusted sources, such as friends, family, or business associates who might have gone through a similar situation.
- Look for insolvency attorneys online and read reviews or testimonials from their previous clients. This will give you an indication of their reputation and the quality of the services they offer. Inquire about their past cases and successes. Attorneys with a proven track record of handling similar cases successfully are more likely to guide you effectively through the insolvency process.
- Some insolvency attorneys will call you on your request for an initial free introduction to discuss your situation. This provides you with an opportunity to ask about their experience, the services they offer, their approach to handling insolvency cases, and the fees they charge. You can assess their expertise and determine if you are comfortable working with them.
- Finally, trust your instincts when choosing insolvency attorneys. Remember that declaring insolvency has serious implications and should not be taken lightly. It’s crucial to seek legal advice specific to your situation before making any decisions related to insolvency.
Past Results Indicates Future Success
Francois Uys Incorporated Attorneys is a law firm that has successfully represented individuals and corporations in contentious and challenging insolvency matters for over 33 years. Our reputation has grown with our body of experienced, reliable, and competent attorneys. We will fight for you both in and out of court and ensure you get the best possible outcome. Make an appointment with Francois Uys Inc Attorneys and let us help you before you declare insolvency.
Disclaimer: This article is for information purposes only. It does not constitute legal advice and cannot be used to make any decisions. For advice on the topic of insolvency, sequestration and liquidation, contact Francois Uys Inc. The information is relevant as of the date of publishing.
