SEQUESTRATION

 

In cases where none of the other instruments of debt relief can be used, we resort to sequestration.


In essence, under sequestration, all the debtor’s assets are sold and the proceeds of the sale are used to pay the creditors. Whether or not the proceeds of the sale are sufficient to pay the full amount of all the debts, the debtor is relieved of all his obligations to all his creditors.
The value of the debtor’s assets must be sufficient to pay the costs of the sequestration.
This remedy is not a remedy aimed at helping the debtor. It is aimed at protecting the interests of the creditors. As such, it must be shown that it is in the creditors’ interests to sequestrate the person concerned. They must get something out of the procedure.
This is a relatively expensive debt relief instrument.

WHO MAY APPLY?
The following persons may apply to surrender the estates mentioned:

  •  In the case of the estate of a natural person, the debtor himself or his agent may apply. If an agent applies, he must be expressly authorised to do so.

  •  In the case of the estate of a deceased debtor, the executor may apply.

  •  In the case of the estate of a debtor who is incapable of managing his own affairs, the party entrusted with administering the estate may apply.

  •  In the case of a partnership estate, all the members of the partnership who reside in the Republic, or their agent, may apply.

  •  In the case of the joint estate of spouses married in community of property, both spouses may apply.

REQUIREMENTS:

The court may accept the surrender of a debtor’s estate only if it is satisfied

  •  that the debtor’s estate is, in fact, insolvent;

  •  that the debtor owns realisable property of sufficient value to defray all costs of the sequestration, which will, in terms of the Act, be payable out of the free residue of his estate; and

  •  that sequestration will be to the advantage of creditors.

In addition, the court must be satisfied that certain preliminary formalities have been observed.

 

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