Does the prevention of illegal eviction from and unlawful occupation of Land Act of 1998 provide adequate family home protection to insolvent debtors or is it still pie in the sky? (Part 2)

Although some legal systems provide some protection for a debtor’s homestead or family home when his or her estate is insolvent, such direct protective measures are absent in South African insolvency law. Such protection during insolvency can be provided by means of some level of exemption for the insolvent’s family home or homestead, as in the insolvency laws of the USA, or by providing protection of occupancy to the insolvents and his or her dependants, as is the case in England and Wales. In view of developments concerning the protection of a debtor’s primary residence in South African individual debt collecting and execution procedures (in light of the right to housing provided for in section 26 of the Constitution), the question was posed in Part 1 of this article whether a court hearing an application for compulsory sequestration should apply the same principles, especially if the debtor raises the point that the sequestration order may render him or her homeless. In this respect, no direct authority for this proposition could be found. (Commentators have argued for some time that the position of the homestead of the debtor in insolvency needs the legislature’s attention as well, but there has not been real progress in this regard to date.) However, there are a few judgments in which courts have considered the applicability of the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act 19 of 1998 (the PIE Act) after sequestration of the insolvent’s estate. Part 2 of the article is therefore devoted to discussing developments in this regard and to considering what problems are encountered in applying the PIE Act during a debtor’s insolvency. Part 2 also considers whether this Act provides sufficient protection to insolvent debtors to prevent them from being evicted from “their” homes when they cannot afford alternative accommodation. Against this background, the two parts of the article deal with different aspects of the issue under discussion. Ultimately, the two parts aim to provide some answers to the pertinent question – that is, whether the PIE Act can provide effective interim and/or adequate protection to an insolvent debtor who may be evicted from his or her (former) homestead, in particular in the absence of direct measures in insolvency law to protect insolvents and their dependants under these circumstances. In raising this question, pertinent issues regarding the application of the PIE Act in insolvency are also considered.https://journals.co.za/journal/obiterpm2021Mercantile La

The Interaction between the Debt Relief Measures in the National Credit Act 24 of 2005 and Aspects of Insolvency Law

The National Credit Act 34 of 2005 (the 'NCA') aims at promoting responsibility in the credit market by encouraging responsible borrowing, avoidance of over-indebtedness and the fulfilment of financial obligations by consumers, and at discouraging reckless credit granting by credit providers and contractual default by consumers. Although a further aim is to address over-indebtedness by debt review, for instance, this mechanism is based on the principle of satisfaction of the consumer's responsible financial obligations in full. In a recent judgment, Ex parte Ford 2009 (3) SA 376 (WCC), the court has thus refused to grant a sequestration order following an application for voluntary surrender since the bulk of the debt was credit agreements regulated by the NCA. The fact that the debtor-applicant did not apply for debt review in terms of the NCA of 2005 before applying for voluntary surrender played a significant role in the court's decision not to grant the order. This article thus considers the impact of the debt relief remedies in the NCA on insolvency law. In particular it is an attempt to provide some answers to the question if the Insolvency Act 24 of 1936 (hereafter the 'Insolvency Act') is in conflict with the previously stated principle of the NCA, namely full satisfaction of all responsible financial obligations by an over-indebted consumer. It also considers the concepts of over-indebtedness and reckless credit and their related debt relief remedies when considering applications for voluntary surrender or compulsory sequestration in terms of the Insolvency Act.   

Revisiting the state of consumer insolvency in South Africa after twenty years : the courts' approach, international guidelines and an appeal for urgent law reform (2)

No abstract available.http://www.lexisnexis.co.za2015-05-31hb201

South African creditors may wield the Gibbs rule to confront an Italian pre-insolvency statutory restructuring composition

This article summarises the judgment in Cooperativa Muratori & Cementisti & others v Companies and Intellectual Property Commission & others, in which the Supreme Court of Appeal confirmed the statutory denial of business rescue to external companies and refused to recognise and apply the Italian restructuring process in South Africa. The article then discusses the private international law (conflict of laws) on the discharge of a contract by a foreign sequestration or liquidation, and the statutory novation of the contract by a foreign pre-insolvency composition or restructuring. Central to the debate over characterisation and choice of law (between contract or insolvency) is the effect of the Gibbs rule, a long-standing feature of the law of the United Kingdom, South Africa, and several other countries, but increasingly controversial because of contemporary ideas of cross-border insolvency law. The article argues for an approach based on contract and company law rather than insolvency law, because pre-insolvency proceedings, by definition, do not involve a winding-up order or a liquidation process, and, if timely and successful, prevent both. The South African private international law on the recognition of a foreign pre-insolvency statutory composition or restructuring as a foreign judgment may thus need to be reconsidered.https://unisapressjournals.co.za/index.php/CILSAam2022Mercantile La

Body Corporate Palm Lane v Masinge 2013 JDR 2332 (GNP)

In Body Corporate Palm Lane v Masinge (2013 JDR 2332 (GNP)) the court exercised its discretion in terms of section 12(1) of the Insolvency Act 24 of 1936 against the granting of a final order for sequestration even though all the requirements for the granting of such order in terms of section 12(1) were satisfied. The court thus came to the assistance of the respondent-debtor by allowing him the opportunity to pay off his debt rather than have his estate sequestrated and being obliged to surrender his assets and thus also being subjected to the stigma and restrictions of insolvency. In this respect, it is to be noted that it is currently a worldwide trend to accommodate insolvent or over-indebted debtors and to retreat from the principle of maximising returns for creditors as the only objective of consumer insolvency regimes. The following observation in a recent report of the World Bank is pertinent in this regard (see Working Group on the Treatment of the Insolvency of Natural Persons Report on the treatment of the insolvency of natural persons Insolvency and Creditor/ Debtor Regimes Task Force, World Bank 2012 par 393 - available at http://bit.ly/Oft3hp - hereafter the World Bank Report).http://www.dejure.up.ac.zaam201

Various aspects to consider with regard to special insolvency rules for small and medium-sized enterprises in South Africa

The notion of special insolvency rules for small and medium-sized enterprises (SMEs) has attracted attention in international spheres, and within the ambit of some international and comparative approaches, same is considered in this article with particular focus on the South African position. In particular, we show that the South African insolvency regime does not, at present, cater for financially distressed small businesses in a specific and viable manner. In South Africa, although attention has been paid to the development and support of small businesses, similar considerations have not been observed with regard to the insolvency side of small business concerns. No comprehensive and focused process of dealing with financially distressed small businesses exists in the South African insolvency framework. This scenario prevails, notwithstanding that there are existing foreign and international policy guidelines, rules and regimes in developed jurisdictions that can serve as pointers in this regard. The purpose of this article is to first highlight the need for special treatment of small businesses by focusing on the shortcomings in the South African system, and, as a natural sequential development, policy proposals as unavoidable foundations to address these shortcomings. In the premises, the focus is on the principles and policies that are relevant to any discussion regarding insolvent businesses that fall within the scope of the SME category. Therefore, this paper deals with the concept of the small business, the South African insolvency regime and the international position pertaining to small businesses. In particular, the need for special treatment of SMEs under insolvent circumstances is discussed, consideration is given to the existing South African mechanisms available to small businesses in distress and the lack of suitable contextual provisions for small businesses in distress is noted. A core component of this article is the position in South Africa viewed against the backdrop of some international developments, international documents and principles that are relevant to an insolvency and rescue/rehabilitation regime within the context of the small business. As a logical conclusion, recommendations for reform of the South African regime are made.http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-11072016-10-31hb201

Heroorweging van die lot van die vyf dwase maagde : behoort die onversekerde skuldeiser ’n aanspraak op die opbrengs van saaklike sekerheid te geniet?

In hierdie artikel ondersoek die outeurs geselekteerde aspekte wat betrekking het op die posisie van onversekerde skuldeisers wat eise teen ’n insolvente boedel instel. Dit word oor die algemeen aanvaar dat sodanige klas van skuldeisers normaalweg min, indien enigsins, betaling by wyse van ’n dividend ontvang. Daarteenoor staan die versekerde skuldeiser en die statutêre voorkeurskuldeiser in ’n veel gunstiger posisie. Dit is vir die ekonomie en die gemeenskap in die algemeen van uiterste belang dat skuldeisers se regte gerespekteer word, maar die vraag het tog al ontstaan of sekere onversekerde skuldeisers onder bepaalde omstandighede ’n aanspraak op minstens ’n deel van die opbrengs van sekuriteite behoort te hê. Daar word spesifiek verwys na dié skuldeisers wat onvrywillig- lik skuldeisers word en dus nie oor dieselfde gunstige onderhandelingsmoontlikhede beskik as ’n skuldeiser wat doelbewus kontrakteer en dus meer voordelige terme en sekuriteit kan beding nie. Die aspek is as ’n beleidsoorweging in ander regstelsels ondersoek en ook al in beperkte gevalle geïmplementeer. In Suid-Afrika het artikel 135 van die Maatskappywet van 2008 ook ’n super-voorkeur op die sogenaamde na-aanvang finansiering ten gunste van, onder andere, sekere werknemerseise geskep – ’n voorkeur wat selfs bo gespesifiseerde versekerde skuld sal rangeer. Die artikel is nietemin bloot verkennend van aard maar die outeurs meen dat die debat as sulks nie nutteloos is nie en straks verder ondersoek behoort te word.http://www.lexisnexis.co.zanf201

Toepassing van “herroepe” artikels van die Maatskappywet 61 van 1973 op likwidasieverrigtinge van insolvente maatskappye

Die Maatskappyewet 71 van 2008 het op 1 Mei 2011 in werking getree en die Maatskappyewet 61 van 1973 herroep. Nietemin is die bepalings in die 1973-Wet insake korporatiewe insolvensieverrigtinge in wese behou deur artikel 224 en item 9 van skedule 5 by die 2008-Wet. Die 2008-Wet bevat bepalings om die likwidasie van solvente maatskappye in werking te stel maar geen prosedures om dit deur te voer nie, soos wat die 1973-Wet wel bevat. Geen substantiewe bepalings in verband met die gronde en prosedures vir die likwidasie van insolvente maatskappye is ontwikkel en geïnkorporeer in die 2008-Wet nie. In plaas daarvan, en met spesifieke verwysing na die likwidasie van 'n maatskappy wat insolvent is, is die bepalings van hoofstuk 14 van die 1973-Wet van toepassing "asof hierdie bepalings nie herroep is nie". In lig van die voormelde en in die konteks van die likwidasie van insolvente maatskappye, oorweeg hierdie artikel drie vrae. Eerstens word die vraag gevra of 'n interpretasie van item 9 van skedule 5 by die 2008-Wet 'n ruim benadering ondersteun waarvolgens daar gesteun mag word op bepalings van die 1973-Wet wat buite die grense van hoofstuk 14 van die Wet val. Tweedens word eksperimentele oorweging verleen aan die toepassing van die bovermelde benadering om sodoende te kan steun op die bepalings van artikels 12 en 13 van die 1973-Wet. Die saak van Botha NO v Van den Heever NO word in hierdie verband bespreek. Derdens word die vraag gevra of die inhoud van die bepalings insake jurisdiksie (artikel 12) en sekuriteit vir kostes (artikel 13) waarde toevoeg tot die uitvoering van likwidasie prosedures, dus in effek of daar 'n behoefte is om hierdie bepalings te behou binne die konteks van die toepassing van hoofstuk 14 en die likwidasie-prosedures vervat in die 1973-Wet. In afwagting van omvattende wetgewing om insolvensie prosedures te reguleer, word daar voorgestel dat die bepalings van die 1973-Wet in soverre dit betrekking het op die likwidasie van insolvente maatskappye, selfs waar hierdie bepalings nie binne die grense van hoofstuk 14 vervat is nie, steeds aangewend mag word in sekere gevalle.http://www.dejure.up.ac.za/am201

The conundrum of the non-compulsory compulsory notice in terms of Section 129(1)(a) of the National Credit Act

Section 129(1)(a) of the National Credit Act1 plays a pivotal role in the enforcement of credit agreements. Section 129(1)(b), read together with ss 130(1) and 130(3)(a) of the Act, essentially compels a credit provider to deliver a notice in terms of s 129(1)(a) to the consumer prior to enforcement of a credit agreement to which the NCA applies. These provisions are cast in mandatory terms.http://www.jutalaw.co.za/catalogue/itemdisplay.jsp?item_id=360

Impak van artikel 129(1)(a) van die Nasionale Kredietwet op die verjaring van kredietooreenkomsskuld

Die Nasionale Kredietwet 34 van 2005 vereis aflewering van & artikel 129(1)(a)- kennisgewing aan die verbruiker voordat & skuld wat voortspruit uit & kredietooreenkoms wat binne die trefwydte van die Nasionale Kredietwet val, afgedwing kan word. Hierdie kennisgewing het & baie spesifieke doel, naamlik om die verbruiker in te lig oor sy verstek ten aansien van die kredietooreenkoms en sekere alternatiewe geskilbeslegtingsinstansies voor te stel wat die verbruiker kan nader ten einde & dispuut op te los of & plan daar te stel om sy paaiement kragtens die kredietooreenkoms op datum te bring. Die Wet bepaal uitdruklik dat voldoening aan artikel 129(1)(a) & vereiste is voordat verrigtinge ter skuldafdwinging ingestel kan word. Die Wet bevat egter ook & eiesoortige bepaling in artikel 130(4)(b) waarvolgens die hof verplig is om & sui generis bevel te maak in geval van nienakoming van artikel 129(1)(a), te wete dat die hof verplig is om die verrigtinge te verdaag en die stappe te gelas wat die kredietverskaffer moet doen voordat die saak weer kan hervat. Die vraag onstaan gevolglik wat die rol van artikel 129(1)(a) is in die konteks van verjaring van & skuld wat voorspruit uit & kredietooreenkoms wat onder die Nasionale Kredietwet val. Hierdie bydrae ondersoek dus die interaksie tussen die Nasionale Kredietwet en die Wet op Verjaring 69 van 1968 en fokus spesifiek op die rol van die artikel 129(1)(a)- kennisgewing in die konteks van verjaring van kredietooreenkomsskuld.http://www.lexisnexis.co.zaam2016Mercantile La