The term “sequestration” refers to a process where a court declares a person unable to pay his debts due to whatever reason out of his or her control.

The process regarding a sequestration can shortly be divided into two different avenues being:

  1. Voluntary sequestration/surrender of estate; or
  2. Forced sequestration.

With either of the two, the aim is to have the insolvent person’s estate declared insolvent and unable to settle its debts. In this article we will not delve too deep into the process to follow regarding the sequestration of a person’s estate, we will focus on applying for rehabilitation after the estate has been sequestrated either by way of a forced sequestration or by way of voluntary surrender of estate.

In terms of the Insolvency Act 24 of 1936, a person is automatically rehabilitated after a period of 10 years from date of provisional sequestration. When a person wishes to be rehabilitated prior to the expiration of the 10-year period and has reached a certain stage, as will be discussed below, after his estate being sequestrated, he/she may apply to the Court for a rehabilitation order. It is not only the sequestrated person who may apply for the relevant estate to be rehabilitated. The following persons may apply for the rehabilitation of the relevant estate:

  • The insolvent person himself;
  • A widow of the insolvent person who was married to that insolvent person, alternatively when the spouses are still married, both of them need to be cited in the application;
  • The estate of the deceased insolvent in which event the executor of the relevant estate will be the applicant.

The application for rehabilitation must be brought in the same Court wherein the sequestration order was granted and can be brought on the following basis:

  • When a composition offer (an offer to settle the debts/part of the debts) has been made and/or the insolvent/applicant who intends on bringing the application has given sufficient security for the debts and at least seventy five percent of the creditors have accepted the offer of composition or security;
  • By way of a lapse in time as follows:
  1. 12 months from the date of the first liquidation and distribution account;
  2. If the person was previously sequestrated, after three (3) years from date of confirmation by the Master of the first liquidation and distribution account;
  3. If convicted of any fraudulent act in relation to his insolvency, within 5 years from date of his conviction;
  4. Within 4 years after the date of sequestration, only in the event that the Master of the High Court recommends the rehabilitation.
  • Within 6 months in the event that no claims were proved against the insolvent estate.
  • After full payment has been made of the proved claims against the insolvent estate and further after the Master of the High Court has confirmed the account.

It would be advisable that the insolvent estate of a person be rehabilitated as soon as legally possible in order for the said person to continue with normal access to credit and to attend to the repair of his/her credit record.

Should you be unsure whether you are eligible for a rehabilitation do not hesitate to contact our offices for assistance with same as well as assistance with your rehabilitation application.

Jaques van den Ende
Associate Attorney
T: 012 993 5907