This form of Sequestration is being affected by the Creditor, who is the applicant in the Court Application, and is based on a liquid claim the Creditor has against the Debtor, for example, money lent to the Debtor by the Creditor. In these sequestrations, the Appointed Administrator (Curator), is compelled to hunt for assets.
Take note that during the Debtor’s period of insolvency, he is not entitled to incur any debt, and/or serve as a director of a company. The Debtor is also not allowed to be a Trustee on a Trust.
How does it all work?
If a Debtor owes a Creditor an amount of money and made an agreement for payment of this amount, and do not adhere to the payment agreement, the Creditor will instruct an Attorney to collect these monies on their behalf.
The Process
The process starts with letter to the Debtor from the Creditors’ Attorney to inform the Debtor that should payment in terms of the agreement is not adhered to, the Creditor will continue with a Compulsory Sequestration Order Against the Debtor. Once the Debtor commit an Act of Insolvency, the Creditor will have the legal right to continue with a Compulsory Sequestration Application.
Proof must be provided to confirm that the Debtor owes monies to the Creditor and this proof must form part of the High Court Application.
There are different ways a Compulsory Sequestration can be done, and it is not always successful, especially if there’s not sufficient assets to adhere to a minimum amount necessary for the benefit of the creditor.
Do I need to be a Business Owner to bring a Compulsory Sequestration Application against an individual?
No, you do not need to be a business owner. As long as the Creditor can proof that the Debtor owes him the monies and did not adhere to the payment plan in question and committed an act of Insolvency, the Creditor can continue with a Compulsory Sequestration Application.
