Specialists in Civil Litigation, Family Law, Corporate and Commercial Law, Estate Planning & Insolvency.
Insolvency Law is steered by the Insolvency Act 24 of 1936, along with the Companies Act. In South African law, insolvency refers to a status of reduced legal capacity, imposed by the courts on persons and legal entities (such as companies, partnerships, trusts, clubs, deceased estates) that are unable to pay their debts.
Voluntary Surrender, or forced sequestration, is an option for those clients not able to meet their debt obligations, and is the option debt review is proven not to be an option.
Asset Sequestration is where your assets are sold and the proceeds are used to settle the debt owed to your credit providers.
Cash Sequestration comes into play where you do not have any assets to sell in order to satisfy your debts. The Credit Providers will receive a portion per Rand owed. These processes however have a lasting effect on your future credit record and will have to be set aside by a Court during a Rehabilitation Application.
In a normal dynamic economy, the financial positions of businesses regularly change, sometimes for the worse and unfortunately sometimes even to the extent of insolvency.
In addition to the above, the current economic climate is placing enormous strain on businesses and many are finding themselves in a position of financial distress.
South African Law provides a Legal Framework which governs not only the fates of ailing and failing businesses who itself in financial distress, but also those that are affected by the financial distress of others.
Our law fortunately provides for certain mechanisms through which they may find some financial relief which may avert liquidation – such as Business Rescue.
The Companies Act provides that a Board may resolve that a Company voluntarily begin and place the Company under Supervision if it appears that (1) the Company is financially distressed, or (2) there seems to be a reasonable prospect of rescuing the Company. Business Rescue is a procedure to assist the company to repay its debts and therefore escape liquidation if it is at all possible. A company may trade whilst under Business Rescue
However, if the Company do not foresee being able to pay creditors as they fall due in the next 6 months, then there is a legal obligation to pursue Liquidation of the company. A Company is not allowed to trade when factually insolvent and under Liquidation.
A Company can either be liquidated by (1) when all the members can agree that there is a financial problem, and a special resolution is taken, or (2) one of the creditors making application to the High Court.
Business Liquidation is a legal process in which a liquidator is appointed to ‘wind up’ the affairs of a Company and to divide the yield from the sale of assets amongst creditors fairly and to dissolve the Company in an orderly manner.
At the end of the liquidation process, the company ceases to exist. The purpose of liquidation is to ensure that all the company’s affairs have been dealt with properly.
It is of the utmost importance that you get professional help when considering voluntary company liquidation. Scholtz Attorneys insolvency lawyers in Roodepoort has assisted various clients in this field and the aim is always to act swift and effective to obtain the best result in line with our client’s mandate regarding Business Rescue and Liquidations.
Our experienced team of insolvency attorneys specialize in the following fields of Insolvency law:
We will assist in assessing the debt level and decide on the possibility of voluntary surrender (own client) or sequestration (of another – part of debt collection) or in case of a company – business rescue versus liquidation; and will draft the legal documents and submit in order to obtain the requested mandate for our client.
Whatever your problem, Scholtz Attorneys have the necessary expertise to finalise your dilemma and steer you to a much better situation in these circumstances.
