FORCED SEQUESTRATION

Forced sequestration is known by many other terms as well, for instance, friendly, unfriendly, and compulsory sequestration.  Contrary to one of its terms, friendly sequestration is not a very friendly process, and, in most instances, it is quite hostile. 

What is forced sequestration?
Also known as compulsory sequestration, it occurs when a creditor can prove that a person has committed a so-called ‘Act of Insolvency’.  The creditor will become the applicant in a forced sequestration application in the High Court of South Africa.

What is the first step once an act of insolvency is committed?
The application for compulsory liquidation or insolvency starts once an attorney receives instructions from the applicant to file an application for sequestration.

Who is the applicant?
This is the person or business that the respondent owes money to in a forced sequestration or liquidation application.  Meaning the creditor.

Is it possible for someone or a company to be declared bankrupt without their knowledge?
The applicant must deliver the court documents to the respondent through the sheriff. However, if the respondent receives court documents at their domicile address, the respondent is not required to accept them.

What is a domicile address?
A domicile address in law is the address you specified to the creditor in the credit agreement as the address where all legal notices must be served and delivered.

The court date(s):
When dealing with a compulsory sequestration application, there are normally two court dates. 

If neither the respondent nor a creditor opposes the matter on the first date, the court will grant a provisional sequestration order. 

The court will grant the final court order if neither the respondent nor any creditor oppose the matter on the second court date.

Now that the sequestration order has been granted, what is the way forward? 
The Master of the High Court will appoint a trustee to take care of the administration of the insolvent estate.
 
Who will deal with the day-to-day administration of the insolvent estate?
The Master of the High Court will appoint the curator. Which in turn will deal with the administration of the insolvent estate. Curators are also known as trustees and liquidators, depending on whether it's an insolvent estate of a liquidated business.
 
How will the administration of the insolvent estate be conducted?
The appointed trustee will continue to inform creditors of the person's insolvent status. The creditors will then have the chance to present their claims against the insolvent estate.

Assets & Liabilities:  Yes / No How will the Trustee know?
The trustee will conduct an investigation into the assets and liabilities of the insolvent estate.  Such investigations can include, credit reports, deeds searches, etc. Thereafter, a provisional report will be sent, via email to all creditors. 

The final liquidation & distribution account is confirmed.  What's next?
This means that the estate has been finalised.   Depending on what happened during the administration of the estate, the period towards rehabilitation after sequestration can now be calculated. 

Once the prescribed period has passed, the insolvent can apply for Rehabilitation after sequestration.

Cure Debt – Your Debt Specialist, don’t wait until it’s too late, CALL NOW!