THE INSOLVENCY ACT, NO. 24 OF 1936

(Afrikaans text signed by the Governor-General) (Assented to 17^th June, 1936

ACTTo consolidate and amend the law relating to insolvent persons and to their estates

TABLE OF CONTENTS

1. Repeal of laws
2. Definitions
3. Petition for acceptance of surrender of estate
4. Notice of surrender and lodging at Master’s office of statement of debtor’s affairs
5. Prohibition of sale in execution of property of estate after publication of notice of surrender and appointment of curator bonis 
6. Acceptance by Court of surrender of estate
7. Withdrawal of notice of surrender 
8. Acts of insolvency 8A. Debt review
9. Petition for sequestration of estate
10.Provisional sequestration
11. Service of rule nisi  
12 Final sequestration or dismissal of petition for sequestration
13.     Sequestration of partnership estate 
14. Petitioning creditor to prosecute sequestration proceedings until trustee appointed
15. Compensation to debtor if petition is an abuse of court’s procedure or malicious or vexatious
16. Insolvent and spouse whose separate estate has not been sequestrated must deliver his business records and lodge statement of his affairs with Master
17. Notice of sequestration
18. Appointment of provisional trustee by Master
18A Trustee to furnish particulars of insolvent
18B Trustee may cause caveat to be entered
19. Attachment of property by deputy sheriff
20. Effect of sequestration on insolvent's property
21. Effect of sequestration on property of spouse of insolvent
22. Payment of debts after sequestration
23. Rights and obligations of insolvent during sequestration
24. Provisions relating to property in possession of insolvent after sequestration
25. Estate to remain vested in trustee until composition or rehabilitation
26. Dispositions without value
27. Antenuptial contracts 28.
29. Voidable preferences
30. Undue preference to creditors
31. Collusive dealings before sequestration
32. Proceedings to set aside improper disposition
33. Improper disposition does not affect certain rights
34. Voidable sale of business
35. Uncompleted acquisition of immovable property before sequestration
35A Transactions on exchange
35B Agreements providing for termination and netting
36. Goods not paid for which debtor purchased not on credit
37.     Effect of sequestration upon a lease 
38. Effect of sequestration on contract of service
39. Time and place of meetings of creditors
40. First and second meetings of creditors
41. General meetings of creditors
42. Special meetings of creditors
43. A creditor may register his name and address with trustee
44. Proof of liquidated claims against estate
45. Trustee to examine claims
46. Set-off 47. Right of retention and landlord’s legal hypothec
48. Proof of conditional claim
49.     Claims against partnership distinct from claims against partners 
50. Arrear interest. Debt due after sequestration
51. Withdrawal of claim already proved against estate
52. Voting at meeting of creditors
53. Questions upon which the creditors may vote
54. Election of trustee
55.     Persons disqualified from being trustees 
56. Appointment of trustee. Security for his administration
57. Appointment of trustee or co-trustee by Master
58. Vacation of office of trustee
59. Court may declare a person disqualified from being a trustee, or remove a trustee
60. Removal of trustee by Master
61.     Leave of absence or resignation of trustee 
62. Election of new trustee
63.     Remuneration of trustee or curator bonis 
64. Insolvent and others to attend meetings of creditors
65.     Interrogation of insolvent and other witnesses 
66. Enforcing summonses and giving of evidence
67.     Steps to be taken on suspicion of an offence 
68. Presumption as to record of proceedings and validity of Acts at meetings of creditors
69. Trustee must take charge of property of estate 70. Banking accounts and investments
71. Record of all receipts
72. Unlawful retention of moneys or use of property by trustee
73. Trustee may obtain legal assistance
74. Improper advising or conduct of legal proceedings
75. Legal proceedings against estate. 76. Continuance of pending legal proceedings by surviving or new trustee
77. Recovery of debts due to estate
78. Extension of time for payment or compounding of debts due to estate, and arbitration
79.     Subsistence allowance for insolvent and family 80.     Continuation of insolvent's business. 80bis.     Sale of movable or immovable property on authorization of Master 81.     Trustees report to creditors 82.     Sale of property after second meeting and manner of sale
83. Realization of securities for claims 84. Special provision in case of goods delivered to a debtor in terms of an instalment agreement 85. Exclusion or limitation of preference under legal hypothec 86. Effect of bond and general clause
87. Ranking of mortgages for future debts88. Certain mortgages are invalid. 89. Costs to which securities are subject
90. Land Bank not affected by this Act
91. Liquidation account and plan of distribution or contribution 92. Manner of framing liquidation account
93. Trading account
94. Form of plan of distribution 95. Application of proceeds of securities
96. Funeral and death-bed expenses
97. Cost of sequestration 98. Costs of execution.
98A. Salaries or wages of former employees of insolvent
99. Preference in regard to certain statutory obligations
100. Salary or wages of former employees of insolvent
101. Preference in regard to taxes on persons or the incomes or profits of persons
102. Preference under a general bond
103.     Non-preferent claims 
104. Late proof of claims 105. Form of plan of contribution
106. Contributions by creditors towards cost of sequestration when free residue insufficient
107. Trustee’s account to be signed and verified
108. Inspection of trustee’s accounts by creditors
109. Extension of period for submission of account by trustee
110. Compelling trustee to submit accounts
111. Objections to trustee's account
112. Confirmation of trustee’s accounts
113. Distribution of estate and collection of contributions from creditors
114.     Trustee to produce acquittances for dividends or to pay over unpaid dividends to Master
115.     repealed 
116. Surplus to be paid into Guardians’ Fund until rehabilitation of insolvent
116bis. Failure by trustee to submit account or to perform duties
117. Enforcement of order of Court
118. Enforcing payment of contributions
119. Composition
120. Effect of composition
122. Effect of composition on spouse of the insolvent
123. Functions of trustee under composition
124. Application for rehabilitation
125. Security to be furnished prior to application for rehabilitation
126. Facts to be averred on application for rehabilitation
|127. Opposition to or refusal by Court of rehabilitation
127A Rehabilitation by effluxion of time
128. Partnership cannot be rehabilitated
129. Effect of rehabilitation
130. Illegal inducements to vote for composition or not to oppose rehabilitation
131.     Recovery of penalty 132.     Concealing or destroying books or assets
133. Concealment of liabilities or pretext to existence of assets
134. Failure to keep proper records 135. Undue preferences, contracting debts without expectation of ability to pay, etc.
136. Failure to give information or to deliver assets, books, etc.
137. Obtaining credit during insolvency, offering inducements, etc.
138. Failure to attend meetings of creditors or give certain information
138bis. Presumption in the case of prosecution for failure to notify change of address
139. Failure to appear or to give evidence or giving false evidence
140. Failure of insolvent or spouse to appear to give evidence
141. Acceptance of consideration for certain illegal acts or omissions
142. Removing or concealing property to defeat an attachment or failure to disclose property
143. Criminal liability of partners, administrators, servants or agents
144. Criminal liability of trustee for neglect of certain duties
145. Obstructing trustee 146. Evidence of liability incurred by insolvent
147.     Offences committed by insolvent in different provinces may be tried at his place of business or residence
148.     Deportation of certain persons for certain offences… repealed with effect from 1 October 1984. 
149. Jurisdiction of the Court
150. Appeal
151. Review
151bis. Costs of review
152. Master may direct trustee to deliver documents or property or call upon any person to furnish certain information
153. Fees of office and certain costs
154. Custody of documents. Admissibility of copies or certificates
155. Destruction of documents
156. Insurer obliged to pay third party’s claim against insolvent
157. Formal defects
158. Regulations and policy
158bis. The Minister may amend First Schedule
158ter ….
159. Short title and date of commencement

First Schedule
Form A Notice of Surrender of a Debtor’s Estate
(Section 4(1))
Form B Statement of Debtor’s Affairs
(Sections 4(3) and 16)
Annexure I Immovable Property
annexure II Any Movable Property whatsoever which is not included in Annexure III or Annexure VAnnexure III
Outstanding Claims, Bills, Bonds and Securities
Annexure IV List of Creditors
Annexure V Movable Assets Pledges, Hypothecated, Subject to a Right of Retention or under Attachment in Execution of a Judgement
Annexure VI Enumeration and description of every book in use by the debtor at time of notice of surrender of sequestration, or at the time when he ceased carrying on business
Annexure VII Detailed Statement of Causes of Debtor’s Insolvency
Annexure VIII Personal Information
Form C Affidavit for the Proof of any Claim other than a Claim based on a Promissory Note or other Bill of Exchange (Section 44(4))Form D Affidavit for the Proof of a Claim based on a Promissory Note or other Bill of Exchange (Section 44(4))
Second Schedule
Tariff A Deputy-Sheriff’s Fees (section 19(5))Tariff B Remuneration of Trustee (section 63)
Third Schedule
Master’s Fees of Office (section 153)

1.     Repeal of laws
The Insolvency Act, 1916 (Act No. 32 of 1916), the Insolvency Act, 1916, Amendment Act, 1926 (Act No. 29 of 1926) (except the title and preamble thereof and sections one, seventy-one, seventy-two and seventy-four thereof) and section twenty of the Land Bank Amendment Act, 1934 (Act No. 58 of 1934) are hereby repealed: Provided that if an estate was sequestrated or assigned before the commencement of this Act the sequestration or assignment and all proceedings in connection therewith shall be completed, and a person whose estate was sequestrated or assigned before such commencement and any matter relating to such sequestration, assignment or person shall be dealt with as if this Act had not been passed; and provided further that if, before the said commencement, any action was taken under the said Act No. 32 of 1916 with a view to the surrender or sequestration of an estate but the surrender or sequestration was not effected before the said commencement, such action shall, after such commencement, be deemed to have been taken under this Act, in so far as this Act makes provision therefor.

2.     Definitions

In this Act unless inconsistent with the context -
“account”, in relation to a trustee, means a liquidation, account or a plan of distribution or of contribution, or any supplementary liquidation account or plan of distribution or contribution, as the case may require;
“banking institution” means a banking institution as defined in section 1 of the Banks Act, 1965 (Act No. 23 of 1965), and registered or provisionally registered or deemed to be registered as a banking institution in terms of section 4 of that Act, but does not include a provisionally registered banking institution which is so registered provisionally after the coming into operation of the Insolvency Amendment Act, 1972; (Definition of “banking institution” inserted by section 1 of Act 6 of 1972)
“building society” means a building society as defined in section 1 of the Building Societies Act, 1965 (Act No. 24 of 1965), and finally registered or deemed to be finally registered as a building society in terms of section 5 of that Act; (Definition of “building society” inserted by section 1 of Act 6 of 1972)
“Court” or “the Court”, in relation to any matter means the provincial or local division of the Supreme Court which has jurisdiction in that matter in terms of section one hundred and forty-nine or one hundred and, fifty-one, or any judge of that division; and in relation to any offence under this Act or in section eight, twenty-six, twenty-nine, thirty, thirty-one, thirty-two, paragraph (a) of sub-section (3) of section thirty-four, seventy-two, seventy-three, seventy-jive, seventy-six, seventy-eight or one hundred and forty-seven the expression “Court” or “the Court” includes a magistrate's court which has jurisdiction in regard to the offence or matter in question;
“debtor”, in connection with the sequestration of the debtor's estate, means a person or a partnership or the estate of a person or partnership which is a debtor in the usual sense of the word, except a body corporate or a company or other association of persons which may be placed in liquidation under the law relating to Companies;
“disposition” means any transfer or abandonment of rights to property and includes a sale, lease, mortgage, pledge, delivery, payment, release, compromise, donation or any contract therefor, but does not include a disposition in compliance with an order of the Court; and ‘dispose’ has a corresponding meaning;(Definition of “disposition” amended by section 1 of Act 27 of 1987)
“free residue”, in relation to an insolvent estate, means that portion of the estate which is not subject to any right of preference by reason of any special mortgage, legal hypothec, pledge or right of retention;(Definition of “free residue” amended by section 2(a) of Act 16 of 1943)
“Gazette” deleted(Definition of “Gazette” inserted by section 2(b) of Act 16 of 1943)(Definition of “Gazette” deleted by section 1 of Act 49 of 1996)
“good faith”, in relation to the disposition of property, means the absence of any intention to prejudice creditors in obtaining payment of their claims or to prefer one creditor above another;
“immovable property” means land and every right or interest in land or minerals which is registrable in any office in the Republic intended for the registration of title to land or the right to mine;
“insolvent” when used as a noun, means a debtor whose estate is under sequestration and includes such a debtor before the sequestration of his estate, according to the context;“insolvent estate” means an estate under sequestration;
“magistrate” includes an additional magistrate and an assistant magistrate;
“Master” in relation to any matter, means the Master of the Supreme Court within whose area of jurisdiction that matter is to be dealt with and includes an Assistant Master;
“messenger” means a messenger of a magistrate's court and includes a deputy-messenger;
“Minister” means the Cabinet member responsible for the administration of justice;(Definition of “Minister” inserted by section 1 of Act 16 of 2003)
“movable property” means every kind of property and every right or interest which is not immovable property;
“preference”, in relation to any claim against an insolvent estate, means the right to payment of that claim out of the assets of the estate in preference to other claims; and “preferent” has a corresponding meaning;
“property” means movable or immovable property wherever situate within the Republic, and includes contingent interests in property other than the contingent interests of a fidei commissary heir or legatee;
“Republic” deleted(Definition of “Union” (now “Republic”) inserted by section 2(d) of Act 16 of 1943)(Definition of “Republic” deleted by section 1 of Act 49 of 1996)
“security”, in relation to the claim of a creditor of an insolvent estate, means property of that estate over which the creditor has a preferent right by virtue of any special mortgage, landlord's legal hypothec, pledge or right of retention;
“sequestration order” means any order of Court whereby an estate is sequestrated and includes a provisional order, when it has not been set aside;
“sheriff” includes a deputy sheriff;
"special mortgage” means a mortgage bond hypothecating any immovable property or a notarial mortgage bond hypothecating specially described movable property in terms of section one of the Security by Means of Movable Property Act, 1993 (Act No.57 of 1993), or such a notarial mortgage bond registered before 7 May 1993 in terms of section 1 of the Notarial Bonds (Natal) Act, 1932 (Act No. 18 of 1932), but excludes any other mortgage bond hypothecating movable property; (Definition of “special mortgage” inserted by section 2(c) of Act 16 of 1943)(Definition of “special mortgage” amended by section 4 of Act 57 of 1993)(Definition of “special mortgage” amended by section 1 of Act 157 of 1993, with effect from 7 May 1993)
“Supreme Court”, deleted (Definition of “Supreme Court” inserted by section 2(c) of Act 16 of 1943)(Definition of “Supreme Court” deleted by section 1 of Act 49 of 1996)
'the Territory' deleted(Definition of “the Territory” inserted by section 2(c) of Act 16 of 1943)(Definition of “the Territory” deleted by section 1 of Act 49 of 1996)
“trader” means any person who carries on any trade, business, industry or undertaking in which property is sold, or is bought, exchanged or manufactured for purpose of sale or exchange, or in which building operations of whatever nature are performed, or an object whereof is public entertainment, or who carries on the business of an hotel keeper or boarding-house keeper, or who acts as a broker or agent of any person in the sale or purchase of any property or in the letting or hiring of immovable property; and any person shall be deemed to be a trader for the purpose of this Act (except for the purposes of sub-section (10) of section twenty-one) unless it is proved that he is not a trader as herein before defined: Provided that if any person carries on the trade, business, industry or undertaking of selling property which he produced (either personally or through any servant) by means of farming operations, the provisions of this Act relating to traders only shall not apply to him in connection with his said trade, business, industry or undertaking;
“trustee” means the trustee of an estate under sequestration, and includes a provisional trustee;

3.     Petition for acceptance of surrender of estate
(1) An insolvent debtor or his agent or a person entrusted with the administration of the estate of a deceased insolvent debtor or of an insolvent debtor who is incapable of managing his own affairs, may petition the Court for the acceptance of the surrender of the debtor's estate for the benefit of his creditors.
(2)     All the members of a partnership (other than partners en commandite or special partners as defined in the Special Partnerships Limited Liability Act, 1861 (Act No. 24 of 1861) of the Cape of Good Hope or in Law No.1 of 1865 of Natal) who reside in the Republic, or their agent, may petition the Court for the acceptance of the surrender of the estate of the partnership and of the estate of each such member.
(3)     Before accepting or declining the surrender, the Court may direct the petitioner or any other person to appear and be examined before the Court.

4.     Notice of surrender and lodging at Mater’s office of statement of debtor’s affairs

(1)     Before presenting a petition mentioned in section three the person who intends to present the petition (in this section referred to as the petitioner) shall cause to be published in the Gazette and in a newspaper circulating in the district in which the debtor resides, or, if the debtor is a trader, in the district in which his principal place of business is situate, a notice of surrender in a form corresponding substantially with Form A in the First Schedule to this Act. The said notice shall be published not more than thirty days and not less than fourteen days before the date stated in the notice of surrender as the date upon which application will be made to the Court for acceptance of the surrender of the estate of the debtor.
(2)(a)  Within a period of seven days as from the date of publication of the said notice in the Gazette, the petitioner must deliver or post a copy of the said notice to every one of the creditors of the debtor in question whose address he or she knows or can ascertain.
(b)  The petitioner must further, within the period referred to in paragraph (a), furnish a copy of the notice -(i)  by post to every registered trade union that, to the petitioner's knowledge, represents any of the debtor's employees; and (ii)  to the employees themselves -(aa)  by affixing a copy of the notice to any notice board to which the employees have access inside the debtor's premises; or (bb)  if there is no access to the premises by the employees, by affixing a copy of the notice to the front gate of the premises, where applicable, failing which to the front door of the premises from which the debtor conducted any business immediately prior to the surrender; and(iii)  by post to the South African Revenue Service.(3)     

The petitioner shall lodge at the office of the Master a statement in duplicate of the debtor's affairs, framed in a form corresponding substantially with Form B in the First Schedule to this Act. That statement shall contain the particulars for which provision is made in the said Form, shall comply with any requirements contained therein and shall be verified by an affidavit (which shall be free from stamp duty) in the form set forth therein.
(4)     Upon receiving the said statement, the Master may direct the petitioner to cause any property set forth therein to be valued by a sworn appraiser or by any person designated by the Master for the purpose.(5)     If the debtor resides or carries on business as a trader in any district (other than the district of Wynberg, Simonstown or Bellville in the Province of the Cape of Good Hope) wherein there is no Master's office, the petitioner shall also lodge a copy of the said statement at the office of the magistrate of the district, or, if the debtor resides or so carries on business in a portion of such district in respect of which an additional or assistant magistrate permanently carries out the functions of the magistrate of the district at a place other than the seat of magistracy of that district, at the office of such additional or assistant magistrate.
(6)     The said statement shall be open to the inspection of any creditor of the debtor during office hours for a period of fourteen days from a date to be mentioned in the notice of surrender. (Section 4(1) and (2) amended by section 3 of Act 16 of 1943)(Section 4(5) amended by section 19 of Act 62 of 1955)(Section 4(1) amended by section 1 of Act 49 of 1996)(Section 4(2) amended by section 1 of Act 69 of 2002)

5.     Prohibition of sale in execution of property of estate after publication of notice of surrender and appointment of curator bonis

(1)     After the publication of a notice of surrender in the Gazette in terms of section four, it shall not be lawful to sell any property of the estate in question, which has been attached under writ of execution or other process, unless the person charged with the execution of the writ or other process could not have known of the publication: Provided that the Master, if in his opinion the value of any such property does not exceed R5 000, or the Court, if it exceeds that amount, may order the sale of the property attached and direct how the proceeds of the sale shall be applied.(2)     After the publication of a notice of surrender as aforesaid in the Gazette the Master may, in accordance with policy determined by the Minister, appoint a curator bonis to the debtor's estate, who shall forthwith take the estate into his or her custody and take over the control of any business or undertaking of the debtor, as if he or she were the debtor, as the Master may direct, including any business the debtor is licensed to carry on in terms of the Liquor Act, 1989 (Act 27 of 1989), but subject in every case, mutatis mutandis, to the provisions of section 70. (Section 5 amended by section 4 of Act 16 of 1943)(Section 5(1) amended by section 1 of Act 99 of 1965)(Section 5(1) amended by section 1 of Act 101 of 1983)(Section 5(2) amended by section 2 of Act 16 of 2003)

6.     Acceptance by Court of surrender of estate(1)     If the Court is satisfied that the provisions of section four have been complied with, that the estate of the debtor in question is insolvent, that he owns realizable property of a sufficient value to defray all costs of the sequestration which will in terms of this Act be payable out of the free residue of his estate and that it will be to the advantage of creditors of the debtor if his estate is sequestrated, it may accept the surrender of the debtor's estate and make an order sequestrating that estate.(2)     If the Court does not accept the surrender or if the notice of surrender is withdrawn in terms of section seven, or if the petitioner fails to make the application for the acceptance of the surrender of the debtor's estate before the expiration of a period of fourteen days as from the date specified in the notice of surrender, as the date upon which application will be made to the Court for the acceptance of the surrender of the debtor's estate, the notice of surrender shall lapse and if a curator bonis was appointed, the estate shall be restored to the debtor as soon as the Master is satisfied that sufficient provision has been made for the payment of all costs incurred under subsection (2) of section five.

7.     Withdrawal of notice of surrender
(1)     A notice of surrender published in the Gazette may not be withdrawn without the written consent of the Master.
(2)     A person who has published a notice of surrender in the Gazette may apply to the Master for his consent to the withdrawal of the notice, and if it appears to the Master that the notice was published in good faith and that there is good cause for its withdrawal, he shall give his written consent thereto. Upon the publication, at the expense of the applicant, of a notice of withdrawal and of the Master's consent thereto, in the Gazette and in the newspaper in which the notice of surrender appeared, the notice of surrender shall be deemed to have been withdrawn.

8.     Acts of insolvency
A debtor commits an act of insolvency -(a)     if he leaves the Republic or being out of the Republic remains absent therefrom, or departs from his dwelling or otherwise absents himself, with intent by so doing to evade or delay the payment of his debts;(b)     if a Court has given judgment against him and he fails, upon the demand of the officer whose duty it is to execute that judgment, to satisfy it or to indicate to that officer disposable property sufficient to satisfy it, or if it appears from the return made by that officer that he has not found sufficient disposable property to satisfy the judgment;(c)     if he makes or attempts to make any disposition of any of his property which has or would have the effect of prejudicing his creditors or of preferring one creditor above another;(d)     if he removes or attempts to remove any of his property with intent to prejudice his creditors or to prefer one creditor above another;(e)     if he makes or offers to make any arrangement with any of his creditors for releasing him wholly or partially from his debts;(f)     if, after having published a notice of surrender of his estate which has not lapsed or been withdrawn in terms of section six or seven, he fails to comply with the requirements of sub-section (3) of section four or lodges, in terms of that sub-section, a statement which is incorrect or incomplete in any material respect or fails to apply for the acceptance of the surrender of his estate on the date mentioned in the aforesaid notice as the date on which such application is to be made;(g)     if he gives notice in writing to anyone of his creditors that he is unable to pay any of his debts;(h)     if, being a trader, he gives notice in the Gazette in terms of sub-section (1) of section thirty-four, and is thereafter unable to pay all his debts.

8A.     Debt review
A debtor who has applied for a debt review must not be regarded as having committed an Act of insolvency. (Section 8A inserted by section 38 of Act 19 of 2014)

9.     Petition for sequestration of estate
(1)     A creditor (or his agent) who has a liquidated claim for not less than fifty pounds, or two or more creditors (or their agent) who in the aggregate have liquidated claims for not less than one hundred pounds against a debtor who has committed an act of insolvency, or is insolvent, may petition the Court for the sequestration of the estate of the debtor.(2)     A liquidated claim which has accrued but which is not yet due on the date of hearing of the petition, shall be reckoned as a liquidated claim for the purposes of sub-section (1).(3)(a)  Such a petition shall, subject to the provisions of paragraph (c), contain the following information, namely –(i)  the full names and date of birth of the debtor and, if an identity number has been assigned to him, his identity number;(ii)  the marital status of the debtor and, if he is married, the full names and date of birth of his spouse and, if an identity number has been assigned to his spouse, the identity number is such spouse;(iii)  the amount, cause and nature of the claim in question;(iv)  whether the claim is or is not secured and, if it is, the nature and value of the security; and(v)  the debtor's act of insolvency upon which the petition is based or otherwise allege that the debtor is in fact insolvent.(b)  The facts stated in the petition shall be confirmed by affidavit and the petition shall be accompanied by a certificate of the Master given not more than ten days before the date of such petition that sufficient security has been given for the payment of all fees and charges necessary for the prosecution of all sequestration proceedings and of all costs of administering the estate until a trustee has been appointed, or if no trustee is appointed, of all fees and charges necessary for the discharge of the estate from sequestration.(c)  The particulars contemplated in paragraph (a)(i) and (ii) shall also be set out in the heading to the petition, and if the creditor is unable to set out all such particulars he shall state the reason why he is unable to do so.(d)  In issuing a sequestration order the registrar shall reflect any of the said particulars that appear in the heading to the petition of such order.(4)     Before such a petition is presented to the Court, a copy of the petition and of every affidavit confirming the facts stated in the petition shall be lodged with the Master, or, if there is no Master at the seat of the Court, with an officer in the public service designated for that purpose by the Master by notice in the Gazette, and the Master or such officer may report to the Court any facts ascertained by him which would appear to him to justify the Court in postponing the hearing or in dismissing the petition. The Master or the said officer shall transmit a copy of that report to the petitioning creditor or his agent.(4A)(a) When a petition is presented to the court, the petitioner must furnish a copy of the petition -(i)  to every registered trade union that, as far as the petitioner can reasonably ascertain, represents any of the debtor's employees; and(ii)  to the employees themselves-(aa)  by affixing a copy of the petition to any notice board to which the petitioner and the employees have access inside the debtor's premises; or(bb)  if there is no access to the premises by the petitioner and the employees, by affixing a copy of the petition to the front gate of the premises, where applicable, failing which to the front door of the premises from which the debtor conducted any business at the time of the presentation of the petition;(iii)  to the South African Revenue Service; and(iv)  to the debtor, unless the court, at its discretion, dispenses with the furnishing of a copy where the court is satisfied that it would be in the interest of the debtor or of the creditors to dispense with it.(b)  The petitioner must, before or during the hearing, file an affidavit by the person who furnished a copy of the petition which sets out the manner in which paragraph (a) was complied with.(5)     The Court, on consideration of the petition, the Master's or the said officer's report thereon and of any further affidavit which the petitioning creditor may have submitted in answer to that report, may act in terms of section ten or may dismiss the petition, or postpone its hearing or make such other order in the matter as in the circumstances appears to be just.(Section 9(1) and (3) amended by section 6 of Act 16 of 1943)(Section 9(3) amended by section 2 of Act 99 of 1965)(Section 9(3) amended by section 1 of Act 122 of 1993)(Section 9(4A) inserted by section 2 of Act 69 of 2002)

10.     Provisional sequestration

If the Court to which the petition for the sequestration of the estate of a debtor has been presented is of the opinion that prima facie -(a)  the petitioning creditor has established against the debtor a claim such as is mentioned in sub-section (1) of section nine; and(b)  the debtor has committed an act of insolvency or is insolvent; and(c)  there is reason to believe that it will be to the advantage of creditors of the debtor if his estate is sequestrated,it may make an order sequestrating the estate of the debtor provisionally.

11.     Service of rule nisi
 (1)     If the Court sequestrates the estate of a debtor provisionally it must simultaneously grant a rule nisi calling upon the debtor upon a day mentioned in the rule to appear and to show cause why his or her estate should not be sequestrated finally.(2)     If the debtor has been absent during a period of twenty-one days from his or her usual place of residence and of his or her business (if any) within the Republic, the Court may direct that it is sufficient service of that rule if a copy thereof is affixed to or near the outer door of the buildings where the Court sits and published in the Gazette, or may direct some other mode of service.(2A)     A copy of the rule nisi must be served on – (a)  any trade union referred to in subsection (4);(b)  the debtor's employees by affixing a copy of the petition to any notice board to which the employees have access inside the debtor's premises, or if there is no access to the premises by the employees, by affixing a copy to the front gate, where applicable, failing which to the front door of the premises from which the debtor conducted any business at the time of the presentation of the petition; and(c)  the South African Revenue Service.(3)     Upon the application of the debtor the Court may anticipate the return day for the purpose of discharging the order of provisional sequestration if twenty-four hours' notice of such application has been given to the petitioning creditor.(4)     For the purposes of serving the rule nisi in terms of subsection (2A), the sheriff must establish whether the employees are represented by a registered trade union and determine whether there is a notice board inside the employer's premises to which the employees have access. (Section 11 substituted by section 3 of Act 69 of 2002)

12     Final sequestration or dismissal of petition for sequestration(1)     If at the hearing pursuant to the aforesaid rule nisi the Court is satisfied that -(a)  the petitioning creditor has established against the debtor a claim such as is mentioned in sub-section (1) of section nine; and(b)  the debtor has committed an act of insolvency or is insolvent; and(c)  there is reason to believe that it will be to the advantage of creditors of the debtor if his estate is sequestrated,it may sequestrate the estate of the debtor.(2)     If at such hearing the Court is not so satisfied, it shall dismiss the petition for the sequestration of the estate of the debtor and set aside the order of provisional sequestration or require further proof of the matters set forth in the petition and postpone the hearing for any reasonable period but not sine die.

13.     Sequestration of partnership estate
(1)     If the Court sequestrates the estate of a partnership (whether provisionally or finally or on acceptance of      surrender), it shall simultaneously sequestrate the estate of every member of that partnership other than a partner en commandite or a special partner as defined in the Special Partnerships’ Limited Liability Act, 1861 (Act No. 24 of 1861) of the Cape of Good Hope or in Law No.1 of 1865 of Natal, who has not held himself out as an ordinary or general partner of the partnership in question: Provided that if a partner has undertaken to pay the debts of the partnership within a period determined by the Court and has given security for such payment to the satisfaction of the registrar, the separate estate of that partner shall not be sequestrated by reason only of the sequestration of the estate of the partnership.

(2) Where the individual estate of a partner is unable fully to meet the costs of sequestration, the balance shall be paid out of the assets of the estate of the partnership.
(3)     The surrender of the estate of a partnership shall not be accepted unless and until the Court is satisfied that petitions have been presented for the acceptance of the surrender of the separate estates of all the partners in the partnership concerned, and that in this regard the requirements of section four have been observed. The petitions re the surrender of the separate estates of the several partners may be incorporated in the petition re the surrender of the estate of the partnership.(Section 13 amended by section 7 of Act 16 of 1943)(Section 13(2) amended by section 3 of Act 99 of 1965)

14.     Petitioning creditor to prosecute sequestration proceedings until trustee appointed
(1)     The creditor upon whose petition a sequestration order has been made shall, at his own cost, prosecute all the proceedings in the sequestration until a provisional trustee has been appointed or if no provisional trustee has been appointed until a trustee has been appointed.
(2)     The trustee shall pay to the said creditor out of the first funds of the estate available for that purpose under section ninety-seven his costs, taxed according to the tariff applicable in the Court which made the sequestration order.
(3)     In the event of a contribution by creditors under section one hundred and six, the petitioning creditor, whether or not he has proved a claim against the estate in terms of section forty-four, shall be liable to contribute not less than he would have had to contribute if he had proved the claim stated in his petition.

15.     Compensation to debtor if petition is an abuse of court’s procedure or malicious or vexatious
Whenever the Court is satisfied that a petition for the sequestration of a debtor's estate is an abuse of the court’s procedure or is malicious or vexatious, the Court may allow the debtor forthwith to prove any damage which he or she may have sustained by reason of the presentation of the petition and award him or her such compensation as it may deem fit. (Section 15 substituted by section 4 of Act 69 of 2002)

16.     Insolvent and spouse whose separate estate has not been sequestrated must deliver his business records and lodge statement of his affairs with Master

(1) The registrar of the court granting a final order of sequestration (including an order on acceptance of surrender) shall without delay cause a copy thereof to be served by the deputy sheriff, in the manner provided by the rules of court, on the insolvent concerned and if such order relates to the separate estate of one of two spouses who are not living apart under a judicial order of separation, also on the spouse whose estate has not been sequestrated, and file with the Master a copy of the deputy sheriff’s return of service.
(2)     An insolvent upon whom a copy of such order has been served shall –(a)  forthwith deliver to the deputy sheriff all books and records relating to his affairs, which have not yet been taken into custody in terms of paragraph (a) of subsection (1) of section nineteen and obtain from the deputy sheriff a detailed receipt therefore; and(b)  within seven days of such service lodge, in duplicate, with the Master a statement of his affairs as at the date of the      sequestration order, framed in a form corresponding substantially with Form B of the First Schedule of this Act, containing the particulars for which provision is made in the said Form and verified by an affidavit (which shall be free from stamp duty) in the form set forth therein.
(3) A spouse whose separate estate has not been sequestrated and upon whom a copy of an order referred to in sub-section (1) has been served shall within seven days of such service lodge, in duplicate, with the Master a statement of his affairs, as at the date of the sequestration order, framed in a form corresponding substantially with Form B of the First Schedule of this Act containing the particulars for which provision is made in the said Form and verified by affidavit (which shall be free from stamp duty) in the form set forth therein.
(4) In the statement referred to in paragraph (b) of sub-section (2) or in sub-section (3) any merchandise mentioned therein shall be valued at its cost price or at its market value, at the time of the making of the affidavit, whichever is the lower.
(5)     If the Master is satisfied that the insolvent or a spouse referred to in sub-section (3) was unable to prepare, without assistance, such a statement which he lodged as aforesaid, the person who assisted the insolvent or such spouse with the preparation of the statement shall be entitled to a reasonable fee, to be determined by the Master, which shall be deemed to be part of the costs of the sequestration.(Section 16(1) amended by section 9 of Act 16 of 1943)(Section 16 substituted by section 4 of Act 99 of 1965)

17.     Notice of sequestration
(1)     The registrar shall without delay transmit –
(a)  one original of every sequestration order and of every order relating to an insolvent estate or to a trustee or to an insolvent, made by the Court, to the Master;
(b)  one original of every provisional sequestration order or if a final sequestration order was not preceded by a provisional sequestration order, then of that final order, and of every order amending or setting aside any prior order so transmitted, which was made by the Court to -(i)  the deputy-sheriff of every district in which it appears that the insolvent resides or owns property;(ii)  every officer charged with the registration of title to any immovable property in the Republic;(ii)bis     every officer having charge of a register of ships kept at a port of registry appointed as such in terms of paragraph (c) of section four of the Merchant Shipping Act, 1951, for the registration of ships;(iii)  every sheriff and every messenger who or whose deputy holds under attachment any property belonging to the insolvent estate.(2)     Every officer who has received an order transmitted to him in terms of sub-section (1), or a certificate and a copy of an order transmitted to him in terms of section 18A, shall register each such order, certificate or copy and note thereon the day and hour when it was received in his office.(3)(a)  Upon the receipt by any officer referred to in sub-paragraph (ii) of paragraph (b) of sub-section (1) of a sequestration order, or of a certificate and a copy of an order referred to in section 18A, he shall, if he has not yet entered such a caveat, enter a caveat against the transfer of all immovable property or the cancellation or cession of any bond registered in the name of or belonging to the insolvent, and if the sequestration order or the certificate referred to in section 18A contains the name of the spouse of the insolvent, he shall in like manner enter a caveat in respect of such spouse.(b)  A caveat contemplated in this subsection, whether it was entered before or after the commencement of the Insolvency Amendment Act, 1993, shall expire ten years after the date of the sequestration order in question, or six months after the commencement of the said Act, whichever date is the later.(3)bis  Upon the receipt by any officer referred to in subparagraph (ii)bis of paragraph (b) of subsection (1) of a sequestration order he shall enter a caveat against the transfer of every ship or share in a ship or the cancellation or cessation of every deed of mortgage of a ship or share in a ship registered in the name of or belonging to the insolvent or his or her spouse.(4)     When the Master has received a sequestration order or an order setting aside a provisional sequestration order he shall in each case give notice in the Gazette of such order. (Section 17(4) substituted by section 10 of Act 16 of 1943)(Section 17(1)(b)(ii)bis and 17(3)bis inserted by section 1 (First Schedule) of Act 57 of 1951)(Section 17(2) and 17(3) substituted by section 2 of Act 122 of 1993)18.     Appointment of provisional trustee by Master(1)     As soon as an estate has been sequestrated (whether provisionally or finally) or when a person appointed as trustee ceases to be trustee or to function as such, the Master may, in accordance with policy determined by the Minister, appoint a provisional trustee to the estate in question who shall give security to the satisfaction of the Master for the proper performance of his or her duties as provisional trustee and shall hold office until the appointment of a trustee.(2)     At any time before the first meeting of the creditors of an insolvent estate in terms of section forty, the Master may, subject to the provisions of sub-section (3) of this section, give such directions to the provisional trustee as could be given to a trustee by the creditors at a meeting of creditors.(3)     A provisional trustee shall have the powers and the duties of a trustee, as provided in this Act, except that without the authority of the Court or for the purpose of obtaining such authority he shall not bring or defend any legal proceedings and that without the authority of the Court or Master he shall not sell any property belonging to the estate in question. Such sale shall furthermore be after such notices and subject to such conditions as the Master may direct.(4)     When a meeting of creditors for the election of a trustee has been held in terms of section forty and no trustee has been elected, and the Master has appointed a provisional trustee in the estate in question, the Master shall appoint him as trustee on his finding such additional security as the Master may have required. (Section 18(3) amended by section 11 of Act 16 of 1943)(Section 18(1) amended by section 3 of Act 16 of 2003)18A.     Trustee to furnish particulars of insolventAny person appointed as provisional trustee after the commencement of the Insolvency Amendment Act, 1993, or if no provisional trustee has been appointed, or if the provisional trustee has failed to perform the duties mentioned below, a trustee appointed after the said commencement shall as soon as possible after his appointment determine whether the particulars referred to in section 9(3)(a)(i) and (ii) are correctly reflected in the sequestration order, and if any of such particulars are not so reflected or are incorrectly reflected he shall forthwith take all reasonable steps to obtain the correct particulars and shall transmit a certificate containing such particulars, a copy of the sequestration order and of his appointment to every officer charged with the registration of title to any immovable property in the Republic and to the Master. (Section 18A inserted by section 3 of Act 122 of 1993)18B.     Trustee may cause caveat to be entered(1) A trustee may, before or after the rehabilitation of an insolvent, with the written consent of the Master, by notice to the officer charged with the registration of title to immovable property in the Republic, in respect of immovable property or a bond registered in the name of the insolvent or of his spouse contemplated in section 21(13), cause a caveat to be entered against the transfer of the immovable property or the cancellation or cession of the bond referred to in the notice.(2) The notice referred to in subsection (1) shall be accompanied by the written consent of the Master contemplated in that subsection and shall identify sufficiently the person in respect of whom and the property or bond in respect of which the caveat is to be entered so as to enable the officer charged with the registration to enter the caveat as contemplated in the said subsection. (3) The caveat shall remain in force until the date indicated by the Master in his consent.(Section 18B inserted by section 3 of Act 122 of 1993)19.     Attachment of property by deputy sheriff(1) As soon as a deputy-sheriff has received a sequestration order he shall attach, as hereinafter provided and make an inventory of the movable property of the insolvent estate which is in his district and is capable of manual delivery and not in the possession of a person who claims to be entitled to retain it under a right of pledge or a right of retention or under attachment by a messenger, that is to say -(a) he shall take into his own custody all books of account, invoices, vouchers, business correspondence, and any other records relating to the affairs of the insolvent, cash, share certificates, bonds, bills of exchange, promissory notes, and other securities, and remit all such cash to the Master;(b) he shall leave movable property other than animals in a room or other suitable place properly sealed up or appoint some suitable person to hold any movable property in his custody;

3.      
4. 
   
5.     he shall hand to the person so appointed a copy of the inventory,      with a notice that the property has been attached by virtue of a      sequestration order. That notice shall contain a statement of the      offence constituted by section one hundred and forty-two and      the penalty provided therefor.

4.      
5. 
   
6.      he shall make a detailed list of all such books and records and      endorse thereon any explanation offered by the insolvent in respect      thereof or in respect of any books or records relating to his      affairs which the insolvent is unable to produce;

5.      
6. 
   
7.      if the insolvent is present he shall enquire from him whether the      list referred to in paragraph (d) is a complete list of books and      records relating to his affairs and record his reply thereto.

(1)bis      If an insolvent has in reply to the deputy sheriff’s enquiry intimated that the list referred to in paragraph (d) of sub-section (1) is a complete list of the books and records relating to his affairs, the books and records referred to in such list shall, unless the contrary is proved, in any criminal proceedings against him under this Act, be deemed to be the only books and records maintained by him.(2) Any person interested in the insolvent estate or in the property attached may be present or may authorize another person to be present when the deputy-sheriff is making his inventory.(3) The deputy-sheriff shall -(a)      immediately after effecting the attachment, report to the Master in writing that the attachment has been effected and mention in his report any property which to his knowledge is in the lawful possession of a pledgee or of a person who is entitled to retain such property by virtue of a right of retention and shall submit with such report a copy of the inventory made by him under sub-section (1);(b)      as soon as possible after the appointment of the trustee, submit a copy of such inventory to him.(4) A messenger shall transmit to the Master without delay an inventory of all property attached by him which he knows to belong to an insolvent estate.(5) The deputy-sheriff shall be entitled to fees taxed by the Master according to tariff A in the Second Schedule to this Act and the rules for the construction of that tariff.(6)     The Minister may by notice in the Gazette amend the said tariff A and rules. (Section 19(6) inserted by section 11 of Act 50 of 1956)(Section 19(1)(a) and 19(3) substituted and section 19(1)(d), (e) and 19(1)bis inserted by section 5 of Act 99 of 1965)(Section 19(6) substituted by section 46 and 47 of Act 97 of 1986)(Section 19(6) substituted by section 4 of Act 16 of 2003)

20.     Effect of sequestration on insolvent's property

(1) The effect of the sequestration of the estate of an insolvent shall be -(a) to divest the insolvent of his estate and to vest it in the Master until a trustee has been appointed, and, upon the appointment of a trustee, to vest the estate in him;(b)     to stay, until the appointment of a trustee, any civil proceedings instituted by or against the insolvent save such proceedings as may, in terms of section twenty-three, be instituted by the insolvent for his own benefit or be instituted against the insolvent: Provided that if any claim which formed the subject of legal proceedings against the insolvent which were so stayed, has been proved and admitted against the insolvent's estate in terms of section forty-four or seventy-eight, the claimant may also prove against the estate a claim for his taxed costs, incurred in connection with those proceedings before the sequestration of the insolvent's estate;(c)     as soon as any sheriff or messenger, whose duty it is to execute any judgment given against an insolvent, becomes aware of the sequestration of the insolvent's estate, to stay that execution, unless the Court otherwise directs;(d)     to empower the insolvent, if in prison for debt, to apply to the Court for his release, after notice to the creditor at whose suit he is so imprisoned, and to empower the Court to order his release, on such conditions as it may think fit to impose.(2) For the purposes of sub-section (1) the estate of an insolvent shall include -(a)     all property of the insolvent at the date of the sequestration, including property or the proceeds thereof which are in the hands of a sheriff or a messenger under a writ of attachment;(b)     all property which the insolvent may acquire or which may accrue to him during the sequestration, except as otherwise provided in section twenty-three.

21.     Effect of sequestration on property of spouse of insolvent

(1)     The additional effect of the sequestration of the separate estate of one of two spouses who are not living apart under a judicial order of separation shall be to vest in the Master, until a trustee has been appointed, and, upon the appointment of a trustee, to vest in him all the property (including property or the proceeds thereof which are in the hands of a sheriff or a messenger under a writ of attachment) of the spouse whose estate has not been sequestrated (hereinafter referred to as the solvent spouse) as if it were property of the sequestrated estate, and to empower the Master or trustee to deal with such property accordingly, but subject to the following provisions of this section.(2) The trustee shall release any property of the solvent spouse which is proved -(a)     to have been the property of that spouse immediately before her or his marriage to the insolvent or before the first day of October, 1926; or(b)     to have been acquired by that spouse under a marriage settlement; or(c)     to have been acquired by that spouse during the marriage with the insolvent by a title valid as against creditors of the insolvent; or(d)     to be safeguarded in favour of that spouse by section twenty-eight of this Act or by the Insurance Act, 1923 (Act No. 37 of 1923); or(e)     to have been acquired with any such property as aforesaid or with the income or proceeds thereof.(3)     If the solvent spouse is in the Republic and the trustee is able to ascertain his or her address, the trustee shall not, except with the leave of the Court, realise property which ostensibly belonged to the solvent spouse, until the expiry of six weeks written notice of his intention to do so, given to that spouse. Such notice shall also be published in the Gazette and in a newspaper circulating in the district in which the solvent spouse resides or carries on business, and shall invite all separate creditors for value of that spouse to prove their claims as provided in sub-section (5).(4) The solvent spouse may apply to the Court for an order releasing any property vested in the trustee of the insolvent estate under sub-section (1) or for an order staying the sale of such property or, if it has already been sold, but the proceeds thereof not yet distributed among creditors, for an order declaring the applicant to be entitled to those proceeds; and the Court may make such order on the application as it thinks just.(5)     Subject to any order made under sub-section (4) any property of the solvent spouse realised by the trustee shall bear a proportionate share of the costs of the sequestration as if it were property of the insolvent estate but the separate creditors for value of the solvent spouse having claims which could have been proved against the estate of that spouse if it had been the estate under sequestration, shall be entitled to prove their claims against the estate of the insolvent spouse in the same manner and, except as in this Act is otherwise provided, shall have the same rights and remedies and be subject to the same obligations as if they were creditors of the insolvent estate; and the creditors who have so proved claims shall be entitled to share in the proceeds of the property so realised according to their legal priorities inter se and in priority to the separate creditors of the insolvent estate, but shall not be entitled to share in the separate assets of the insolvent estate.(6) If any property of the solvent spouse (other than property mentioned in paragraph (d) of sub-section (2) has been released by virtue of sub-section (2) or (4) the separate creditors of that spouse shall only be entitled to share in the proceeds of any property of the solvent spouse which has been realised by the trustee, after the property so released and any property of that spouse acquired by her or him since the sequestration, have been excused.(7) Before awarding any such creditor a share in such proceeds, the trustee may require the creditor to lodge with him, within a period to be determined by the Master, an affidavit, supported by such evidence as may be available, setting forth the result of such exclusion and disclosing the balance of his claim which remains unpaid. He shall then be entitled to share as aforesaid in respect of that balance only: Provided that any creditor who has incurred costs in excusing the separate property or the solvent spouse and has been unable to recover those costs from the proceeds of that property shall be entitled to add the amount of those costs to the amount of his claim as proved.(8) If, during the period determined by the Master, any such creditor has failed either to lodge with the trustee such an affidavit as aforesaid, or to excuse any separate property of the solvent spouse still available for the satisfaction of his claim. he shall be debarred from sharing as aforesaid unless the Court otherwise orders.(9)     A creditor of the solvent spouse who has proved a claim as provided in sub-section (5) shall not be liable to make any contribution under section one hundred and six, and shall not be entitled to vote at any meeting of the creditors of the insolvent estate held in terms of section forty, forty-one or forty-two; but any direction of the creditors of the insolvent estate which infringes the rights of any such first-mentioned creditor may be set aside by the Court on the application of such creditor.(10) If the solvent spouse is carrying on business as a trader, apart from the insolvent spouse or if it appears to the Court that the solvent spouse is likely to suffer serious prejudice through the immediate vesting of the property of that spouse in the Master or the trustee, and the Court is satisfied in either case that the solvent spouse is willing and able to make arrangements whereby the interest therein of the insolvent estate in the said property will be safeguarded without such a vesting, the Court, either when making the sequestration order or at some later date, but subject to the immediate completion of such arrangement as aforesaid, may exclude that property or any part thereof from the operation of the order, for such period as it thinks fit. During that period the solvent spouse shall lay before the trustee the evidence available in support of her or his claim to such property and within that period the trustee shall notify the solvent spouse in writing whether or not he will release such property in accordance with subsection (2). If the property has not been so released, then upon the expiry of the said period that property shall vest in the Master or in the trustee, but subject to the provisions of this section.(11) If application is made to the Court for the sequestration of the estate of the solvent spouse on the ground of an act of insolvency committed by that spouse since the vesting of her or his property in the Master or the trustee of the insolvent estate, and the Court is satisfied that the act of insolvency alleged in that application was due to such vesting, then if it appears -(a) that an application is being or, if necessary, will be made under sub-section (4) for the release of any property of the solvent spouse; or(b)     that any property of the solvent spouse has been released since the making of the sequestration order, and that the solvent spouse is now in a position to discharge her or his liabilities,the Court may postpone the hearing of the said application or may make such interim order thereon as to it may seem just.(12) If the trustee has in accordance with the preceding provisions of this section released any property alleged to belong to the solvent spouse, he shall not be debarred thereby from proving that it belongs to the insolvent estate and from recovering accordingly.(13)     In this section the word “spouse” means not only a wife or husband in the legal sense, but also a wife or husband by virtue of a marriage according to any law or custom, and also a woman living with a man as his wife or a man living with a woman as her husband, although not married to one another. (Section 21(2)(d) amended by section 12 of Act 16 of 1943)(Section 21(2)(d) amended by section 1 of Act 49 of 1996)

22.     Payment of debts after sequestration

Every satisfaction in whole or in part of any obligation the fulfilment whereof was due or the cause of which arose before the sequestration of the creditor's estate shall, if made to the insolvent after such sequestration, be void, unless the debtor proves that it was made in good faith and without knowledge of the sequestration.

23.     Rights and obligations of insolvent during sequestration

(1)     Subject to the provisions of this section and of section twenty-four, all property acquired by an insolvent shall belong to his estate.(2)     The fact that a person entering into any contract is an insolvent, shall not affect the validity of that contract: Provided that the insolvent does not thereby purport to dispose of any property of his insolvent estate; and provided further that an insolvent shall not, without the consent in writing of the trustee of his estate, enter into any contract whereby his estate or any contribution towards his estate which he is obliged to make, is or is likely to be adversely affected, but in either case subject to the provisions of sub-section (1) of section twenty-four.(3) An insolvent may follow any profession or occupation or enter into any employment, but he may not, during the sequestration of his estate without the consent in writing of the trustee of his estate, either carry on, or be employed in any capacity or have any direct or indirect interest in, the business of a trader who is a general dealer or a manufacturer: Provided that anyone of the creditors of the insolvent's estate or the insolvent himself may, if the trustee gives or refuses such consent, appeal to the Master, whose decision shall be final.(3)bis. Where a trustee has given his written consent to an insolvent to enter into a contract, or to carry on a trade in terms of sub-section (2) or sub-section (3), as the case may be, he shall forthwith forward to the Master a copy of such consent. Any trustee who does not so forward such consent within one week after it has been granted, shall be deemed to have contravened the provisions of paragraph (b) of section sixty.(4) The insolvent shall keep a detailed record of all assets received by him from whatever source, and of all disbursements made by him in the course of his profession, occupation or employment, and, if required thereto by the trustee, shall transmit to the trustee in the first week of every month a statement verified by affidavit of all assets received and of all disbursements made by him during the preceding month. The trustee may suspect such record at all reasonable times and may demand the production of reasonable vouchers in support of any item in such accounts and of the expenditure of the insolvent for the support of himself and those dependent upon him.(5) The trustee shall be entitled to any moneys received or to be received by the insolvent in the course of his profession, occupation or other employment which in the opinion the Master are not or will not be necessary for the support of the insolvent and those dependent upon him, and if the trustee has notified the employer of the insolvent that the trustee is entitled, in terms of this sub-section, to any part of the insolvent's remuneration due to him at the time of such notification, or which will become due to him thereafter, the employer shall pay over that part to the trustee.(6) The insolvent may sue or may be sued in his own name without reference to the trustee of his estate in any matter relating to status or any right in so far as it does not affect his estate or in respect of any claim due to or against him under this section, but no cession of his earnings after the sequestration of his estate, whether made before or after the sequestration shall be of any effect so long as his estate is under sequestration.(7) The insolvent may for his own benefit recover any pension to which he may be entitled for services rendered by him.(8)     The insolvent may for his own benefit recover any compensation for any loss or damage which he may have suffered, whether before or after the sequestration of his estate, by reason of any defamation or personal injury: Provided that he shall not, without the leave of the Court, institute an action against the trustee of his estate on the ground of malicious prosecution or defamation.(9)     Subject to the provisions of sub-section (5) the insolvent may recover for his own benefit, the remuneration or reward for work done or for professional services rendered by or on his behalf after the sequestration of his estate.(10) The insolvent may be sued in his own name for any delict committed by him after the sequestration of his estate, and his insolvent estate shall not be liable therefor.(11) Any property claimable by the trustee from the insolvent under this section may be recovered from the insolvent by writ of execution to be issued by the registrar upon the production to him of a certificate by the Master that the property stated therein is so claimable.(12)     The insolvent shall at any time before the second meeting of the creditors of his estate held in terms of section forty, at the request of the trustee assist the trustee to the best of his ability in collecting, taking charge of or realising any property belonging to the estate: Provided that the trustee shall, during the period of such assistance, give to the insolvent out of the estate such an allowance in money or goods as is, in the opinion of the Master, necessary to support the insolvent and his or her dependants.(13) The insolvent shall keep the trustee of his estate informed of his residential and postal addresses.(14) Any notice or information which is to be conveyed to an insolvent in terms of this Act, may be delivered to him personally or may be delivered at or sent in a registered letter by post to an address given by the insolvent to the trustee in terms of sub-section (13).(Section 23(3)bis inserted by section 13 of Act 16 of 1943)

24.     Provisions relating to property in possession of insolvent after sequestration

(1) If an insolvent purports to alienate, for valuable consideration, without the consent of the trustee of his estate any property which he acquired after the sequestration of his estate (and which by virtue of such acquisition became part of his sequestrated estate) or any right to any such property to a person who proves that he was not aware and had no reason to suspect that the estate of the insolvent was under sequestration the alienation shall nevertheless be valid.(2) Whenever an insolvent has acquired the possession of any property, such property shall, if claimed by the trustee of the insolvent's estate, be deemed to belong to that estate unless the contrary is proved; but if a person who became the creditor of the insolvent after the sequestration of his estate, alleges (whether against the trustee or against the insolvent) that any such property does not belong to the said estate and claims any right thereto, the property shall be deemed not to belong to the estate, unless the contrary is proved.

25.     Estate to remain vested in trustee until composition or rehabilitation

(1)     The estate of an insolvent shall remain vested in the trustee until the insolvent is reinvested therewith pursuant to a composition as in section 119 provided, or until the rehabilitation of the insolvent in terms of section 127 or 127A: Provided that, subject to the provisions of subsection (3), any property which immediately before the rehabilitation is vested in the trustee shall remain vested in him after the rehabilitation for the purposes of realization and distribution.(2) When a trustee has vacated his office or has been removed from office or has resigned or died the estate shall vest in the remaining trustee, if any; otherwise it shall vest in the Master until another trustee has been appointed.(3)       After the expiry of ever caveat entered in terms of section 17(3), 18B or 127 A in respect of the property of an insolvent any act of registration in respect of such property brought about by him shall be valid in spite of the fact that the property formed part of his insolvent estate.(4) If a person who is or was insolvent unlawfully disposes of immovable property or a right to immovable property which forms part of his insolvent estate, the trustee may, notwithstanding the provisions of subsection (3), recover the value of the property or right so disposed of -(a) from the insolvent or former insolvent;(b) from any person who, knowing such property or right to be part of the insolvent estate, acquired such property or right from the insolvent or former insolvent; or(c)      from any person who acquired such property or right from the insolvent or former insolvent without giving sufficient value in return, in which case the amount so recovered shall be the difference between the value of the property or right and any value given in return. (Section 25(1) substituted by section 2 of Act 6 of 1972)(Section 25(1) substituted and 25(3) and 25(4) added by section 4 of Act 122 of 1993)

26.      Dispositions without value

(1)     Every disposition of property not made for value may be set aside by the Court if such disposition was made by an insolvent~(a)     more than two years before the sequestration of his estate, and it is proved that, immediately after the disposition was made, the liabilities of the insolvent exceeded his assets;(b)     within two years of the sequestration of his estate, and the person claiming under or benefited by the disposition is unable to prove that, immediately after the disposition was made, the assets of the insolvent exceeded his liabilities:Provided that if it is proved that the liabilities of the insolvent at any time after the making of the disposition exceeded his assets by less than the value of the property disposed of, it may be set aside only to the extent of such excess.(2) A disposition of property not made for value, which was set aside under subsection (1) or which was uncompleted by the insolvent, shall not give rise to any claim in competition with the creditors of the insolvent's estate: Provided that in the case of a disposition of property not made for value, which was uncompleted by the insolvent, and which –(a) was made by way of suretyship, guarantee or indemnity; and(b) has not been set aside under subsection (1),the beneficiary concerned may compete with the creditors of the insolvent’s estate for an amount not exceeding the amount by which the value of the insolvent’s assets exceeding his liabilities immediately before the making of that disposition. (Section 26(2) substituted by section 1 of Act 84 of 1984)

27.     Antenuptial contracts

(1) No immediate benefit under a duly registered antenuptial contract given in good faith by a man to his wife or any child to be born of the marriage shall be set aside as a disposition without value, unless that man's estate was sequestrated within two years of the registration of that antenuptial contract..(2) In sub-section (1) the expression “immediate benefit” means a benefit given by a transfer, delivery, payment, cession, pledge, or special mortgage of property completed before the expiration of a period of three months as from the date of the marriage.28.     …           (Section 28 repealed by section 78 of Act 27 of 1943)

29.     Voidable preferences

(1)     Every disposition of his property made by a debtor not more than six months before the sequestration of his estate or, if he is deceased and his estate is insolvent, before his death, which has had the effect of preferring one of his creditors above another, may be set aside by the Court if immediately after the making of such disposition the liabilities of the debtor exceeded the value of his assets, unless the person in whose favour the disposition was made proves that the disposition was made in the ordinary course of business and that it was not intended thereby to prefer one creditor above another.(2)     …(3)     Every disposition of property made under a power of attorney whether revocable or irrevocable, shall for the purposes of this section and of section thirty be deemed to be made at the time at which the transfer or delivery or mortgage of such property takes place.(4)     For the purposes of this section any period during which the provisions of subsection (1) of section eleven of the Farmers’ Assistance Act, 1935 (Act No. 48 of 1935), applied in respect of any debtor as an applicant in terms of the said act, shall not be taken into consideration in the calculation of any period of six months.     (Section 29(4) inserted by section 17 of Act 16 of 1960)(Section 29(1) amended and 29(2) deleted by section 9 of Act 64 of 1960)(Section 29(1) substituted by section 6 of Act 99 of 1965)

30.     Undue preference to creditors

(1) If a debtor made a disposition of his property at a time when his liabilities exceeded his assets, with the intention of preferring one of his creditors above another, and his estate is thereafter sequestrated, the Court may set aside the disposition.(2)     For the purposes of this section and of section twenty nine a surety for the debtor and a person in a position by law analogous to that of a surety shall be deemed to be a creditor of the debtor concerned.

31.     Collusive dealings before sequestration

(1) After the sequestration of a debtor's estate the Court may set aside any transaction entered into by the debtor before the sequestration, whereby he, in collusion with another person, disposed of property belonging to him in a manner which had the effect of prejudicing his creditors or of preferring one of his creditors above another.(2) Any person who was a party to such collusive disposition shall be liable to make good any loss thereby caused to the insolvent estate in question and shall pay for the benefit of the estate, by way of penalty, such sum as the Court may adjudge, not exceeding the amount by which he would have benefited by such dealing if it had not been set aside; and if he is a creditor he shall also forfeit his claim against the estate.(3) Such compensation and penalty may be recovered in any action to set aside the transaction in question.

32.     Proceedings to set aside improper disposition

(1)     (a)      Proceedings to recover the value of property or a right in terms of section 25(4), to set aside any disposition of property under section 26, 29, 30 or 31, or for the recovery of compensation or a penalty under section 31, may be taken by the trustee. (b) If the trustee fails to take any such proceedings they may be taken by any creditor in the name of the trustee upon his indemnifying the trustee against all costs thereof.(2) In any such proceedings the insolvent may be compelled to give evidence on a subpoena issued on the application of any party to the proceedings or he may be called by the Court to give evidence. When giving such evidence he may not refuse to answer any question on the ground that the answer may tend to incriminate him or on the ground that he is to be tried on a criminal charge and may be prejudiced at such a trial by his answer.(3)     When the Court sets aside any disposition of property under any of the said sections, it shall declare the trustee entitled to recover any property alienated under the said disposition or in default of such property the value thereof at the date of the disposition or at the date on which the disposition is set aside, whichever is the higher. (Section 32(1) substituted by section 5 of Act 122 of 1993)

33.     Improper disposition does not affect certain rights

(1)     A person who, in return for any disposition which is liable to be set aside under section twenty-six, twenty-nine, thirty or thirty-one, has parted with any property or security which he held or who has lost any right against another person, shall, if he acted in good faith, not be obliged to restore any property or other benefit received under such disposition, unless the trustee has indemnified him for parting with such property or security or for losing such right.(2)     Section twenty-six, twenty-nine, thirty or thirty-one shall not affect the rights of any person who acquired property in good faith and for value from any person other than a person whose estate was subsequently sequestrated.

34.     Voidable sale of business

(1)     If  a trader transfers in terms of a contract any business belonging to him, or the goodwill of such business or any goods or property forming part thereof (except in the ordinary course of that business or for securing the payment of a debt) and such trader has not published a notice of such intended transfer in the Gazette, and in two issues of an Afrikaans and two issues of an English newspaper circulating in the district in which that business is carried on, within a period not less than thirty days and not more than sixty days before the date of such transfer, the said transfer shall be void as against his creditors for a period of six months after such transfer, and shall be void against the trustee of his estate, if his estate is sequestrated at any time within the said period.(2) As soon as any such notice is published, every liquidated liability of the said trader in connection with the said business, which would become due at some future date, shall fall due forthwith, if the creditor concerned demands payment of such liability: Provided that if such liability bears no interest, the amount of such liability which would have been payable at such future date if such demand had not been made, shall be reduced at the rate of eight per cent, per annum of that amount, over the period between the date when payment is made and that future date.(3) If any person who has any claim against the said trader in connection with the said business, has before such transfer, for the purpose of enforcing his claim, instituted proceedings against the said trader -(a)     in any court of law, and the person to whom the said business was transferred knew at the time of the transfer that those proceedings had been instituted; or(b)     in a Division of the Supreme Court having jurisdiction in the district in which the said business is carried on or in the magistrate's court of that district,the transfer shall be void as against him for the purpose of such enforcement.(4) For the purposes of this section ‘transfer’, when used as a noun, includes actual or constructive transfer of possession, and, when used as a verb, has a corresponding meaning.(Section 34(1) substituted by section 12 of Act 32 of 1952)(Section 34(2) amended by section 2 of Act 101 of 1983)(Section 34(1) and (3) amended by section 2 of Act 27 of 1987)(Section 34 amended by section 1 of Act 6 of 1991)

35.     Uncompleted acquisition of immovable property before sequestration

If an insolvent, before the sequestration of his estate, entered into a contract for the acquisition of immovable property which was not transferred to him, the trustee of his insolvent estate may enforce or abandon the contract. The other party to the contract may call upon the trustee by notice in writing to elect whether he will enforce or abandon the contract, and if the trustee has after the expiration of six weeks as from the receipt of the notice, failed to make his election as aforesaid and inform the other party thereof, the other party may apply to the Court by motion for cancellation of the contract and for an order directing the trustee to restore to the applicant the possession of any immovable property under the control of the trustee, of which the insolvent or the trustee gained possession or control by virtue of the contract, and the Court may make such order on the application all it thinks fit: Provided that this section shall not affect any right which the other party may have to establish against the insolvent estate, a non-preferent claim for compensation for any loss suffered by him as a result of the non-fulfilment of the contract.

35A      Transactions on exchange(1)      In this section-     'market infrastructure' means –

1.  (1) In this section-  
    
       'exchange' means an exchange as defined in section 1 and licensed under section 10 of 
   the Securities Services Act, 2004, and for the purposes of this section includes a central 
   securities depository as defined in section 1 of that Act and which is also licensed as a clearing 
   house under section 66 of that Act, or a clearing house as defined in section 1 of that Act;  
   [Definition of 'exchange' substituted by s. 117 of Act 36 of 2004.]  
    
       'market participant' means an authorised user, a participant, a client or a settling party 
   as defined in section 1 of the Securities Services Act, 2004, or any other party to a 
   transaction;  
   [Definition of 'market participant' substituted by s. 2 of Act 104 of 1996 and by s. 117 of Act 
   36 of 2004.]  
    
       'exchange rules' means the exchange rules and depository rules as defined in section 1 of 
   the Securities Services Act, 2004;  
   [Definition of 'exchange rules', previously 'rules of an exchange', substituted by s. 117 of Act 
   36 of 2004.]  
    
       'transaction' means any transaction to which the rules of an exchange apply.  
    
       (2) If upon the sequestration of the estate of a market participant the obligations of such 
   market participant in respect of any transaction entered into prior to sequestration have not 
   been fulfilled, the exchange in question in respect of any obligation owed to it, or any other 
   market participant in respect of obligations owed to such market participant, shall in 
   accordance with the rules of that exchange applicable to any such transaction be entitled to 
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   participant shall be bound by such termination.  
    
       (3) No claim as a result of the termination of any transaction as contemplated in subsection 
   (2) shall exceed the amount due upon termination in terms of the rules of the exchange in 
   question.  
    
       (4) Any rules of an exchange and the practices thereunder which provide for the netting of 
   a market participant's position or for set-off in respect of transactions concluded by the market 
   participant or for the opening or closing of a market participant's position shall upon 
   sequestration of the estate of the market participant be binding on the trustee in respect of 
   any transaction or contract concluded by the market participant prior to such sequestration, 
   but which is, in terms of such rules and practices, to be settled on a date occurring after the 
   sequestration, or settlement of which was overdue on the date of sequestration.  
    
       (5) Section 341 (2) of the Companies Act, 1973 ( Act 61 of 1973 ), and sections 26, 29 and 
   30 of this Act shall not apply to property disposed of in accordance with the rules of an 
   exchange.  
   [S. 35A inserted by s. 1 of Act 32 of 1995.]   
   36 of 2004.]  
    
       'exchange rules' means the exchange rules and depository rules as defined in section 1 of 
   the Securities Services Act, 2004;  
   [Definition of 'exchange rules', previously 'rules of an exchange', substituted by s. 117 of Act 
   36 of 2004.]  
    
       'transaction' means any transaction to which the rules of an exchange apply.  
    
       (2) If upon the sequestration of the estate of a market participant the obligations of such 
   market participant in respect of any transaction entered into prior to sequestration have not 
   been fulfilled, the exchange in question in respect of any obligation owed to it, or any other 
   market participant in respect of obligations owed to such market participant, shall in 
   accordance with the rules of that exchange applicable to any such transaction be entitled to 
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   participant shall be bound by such termination.  
    
       (3) No claim as a result of the termination of any transaction as contemplated in subsection 
   (2) shall exceed the amount due upon termination in terms of the rules of the exchange in 
   question.  
    
       (4) Any rules of an exchange and the practices thereunder which provide for the netting of 
   a market participant's position or for set-off in respect of transactions concluded by the market 
   participant or for the opening or closing of a market participant's position shall upon 
   sequestration of the estate of the market participant be binding on the trustee in respect of 
   any transaction or contract concluded by the market participant prior to such sequestration, 
   but which is, in terms of such rules and practices, to be settled on a date occurring after the 
   sequestration, or settlement of which was overdue on the date of sequestration.  
    
       (5) Section 341 (2) of the Companies Act, 1973 ( Act 61 of 1973 ), and sections 26, 29 and 
   30 of this Act shall not apply to property disposed of in accordance with the rules of an 
   exchange.  
   [S. 35A inserted by s. 1 of Act 32 of 1995.]   

'market participant' means an authorised user, a participant, a clearing member or a client as defined in section 1 of the Financial Markets Act, 2012, or any other party to a transaction;‘

rules ' means the exchange rules, depository rules or clearing house rules, as defined in section 1 of the Financial Markets Act, 2012;     'transaction' means any transaction to which the rules apply. (2)     If upon the sequestration of the estate of a market participant the obligations of such market participant in respect of any transaction entered into prior to sequestration have not been fulfilled, the market infrastructure in respect of any obligation owed to it, or any other market participant in respect of obligations owed to such market participant, shall in accordance with the rules applicable to any such transaction be entitled to terminate transactions or revoke settlement instructions and the trustee of the insolvent estate of the market participant shall be bound by such termination or revocation.(3)      No claim as a result of the termination or revocation of any transaction as contemplated in subsection (2) shall exceed the amount due upon termination or revocation in terms of the rules in question. (4)      Any rules and the practices thereunder which provide for the netting of a market participant's position or for set-off in respect of transactions concluded by the market participant or for the opening or closing of a market participant's position or for the revocation of settlement instructions shall upon sequestration of the estate of the market participant be binding on the trustee in respect of any transaction or contract concluded by the market participant prior to such sequestration, but which is, in terms of such rules and practices, to be settled on a date occurring after the sequestration, or settlement of which was overdue on the date of sequestration, (5)      Section 341(2) of the Companies Act, 1973 (Act No. 61 of 1973), and sections 26, 29 and 30 of this Act shall not apply to property disposed of in accordance with the rules. (Section 35A inserted by section 1 of Act 32 of 1995)(Section 35A(1) amended by section 2 of Act 104 of 1996)(Section 35A(1) amended by section 117 of Act 36 of 2004)(Section 35A(1) amended by section 111 of Act 19 of 2012)

35B     Agreements providing for termination and netting

(1) Notwithstanding any rule of the common law to the contrary, all unperformed obligations arising out of one or more master agreements between the parties, or obligations arising from such agreement or agreements in respect of assets in which ownership has been 
transferred as collateral security, shall, upon the sequestration of the estate of a party to such master agreement, terminate automatically at the date of sequestration, the values of those obligations shall be calculated at market value as at that date, the values so calculated shall be netted and the net amount shall be payable.  
 
    (2) For purposes of this section 'master agreement' means-  
       (a)     an agreement in accordance with standard terms published by the International Swaps and Derivatives Association, the International Securities Lenders Association, the Bond Market Association or the International Securities Market Association, or any similar agreement, which provides that, upon the sequestration of one of the parties-  
          (i)     all unperformed obligations of the parties in terms of the agreement-  
             (aa)     terminate or may be terminated; or  
             (bb)     become or may become due immediately; and  
          (ii)     the values of the unperformed obligations are determined or may be 
determined; and  
          (iii)     the values are netted or may be netted, so that only a net amount (whether in the currency of the Republic or any other currency) is payable to or by a party,  and which may further provide that the values of assets which have been transferred as collateral security for obligations under that agreement shall be included in the calculation of the net amount payable upon sequestration; or  
       (b)     any agreement declared by the Minister, after consultation with the Minister of Finance, by notice in the Gazette to be a master agreement for the purposes of this section.  
 
    (3) The provisions of this section shall not apply to-  
       (a)     a transaction contemplated in section 35A; or  
       (b)     a netting arrangement contemplated in the National Payment System Act, 1998 ( Act 78 of 1998 ).  
 
  (4) Section 341 (2) of the Companies Act, 1973 ( Act 61 of 1973 ), and sections 26, 29 and 
30 of this Act shall not apply to dispositions in terms of a master agreement.  
[S. 35B inserted by s. 1 of Act 32 of 1995 and substituted by s. 2 of Act 55 of 2003.]   

36     Goods not paid for which debtor purchased not on credit  
 
    (1) If a person, before the sequestration of his estate, by virtue of a contract of purchase 
and sale which provided for the payment of the purchase price upon delivery of the property in 
question to the purchaser, received any movable property without paying the purchase price in 
full, the seller may, after the sequestration of the purchaser's estate, reclaim that property if 
within ten days after delivery thereof he has given notice in writing to the purchaser or to the 
trustee of the purchaser's insolvent estate or to the Master, that he reclaims the property: 
Provided that if the trustee disputes the seller's right to reclaim the property, the seller shall 
not be entitled to reclaim it, unless he institutes, within fourteen days after having received 
notice that the trustee so disputes his right, legal proceedings to enforce his right.  
 
    (2) For the purposes of subsection (1) a contract of purchase and sale shall be deemed to 
provide for the payment of the purchase price upon delivery of the property in question to the 
purchaser, unless the seller has agreed that the purchase price or any part thereof shall not be 
claimable before or at the time of such delivery.  
 
    (3) The trustee of the purchaser's insolvent estate shall not be obliged to restore any 
property reclaimed by the seller in terms of subsection (1) unless the seller refunds to him 
every part of the purchase price which he has already received.  
 
    (4) Except as in this section provided, a seller shall not be entitled to recover any property 
which he sold and delivered to a purchaser whose estate was sequestrated after the sale, only 
by reason of the fact that the purchaser failed to pay the purchase price.  
 
    (5) The owner of the movable property which was in the possession or custody of a person 
at the time of the sequestration of that person's estate, shall not be entitled to recover that 
property if it has, in good faith, been sold as part of the said person's insolvent estate, unless 
the owner has, by notice in writing, given, before the sale, to the curator bonis if one has been 
appointed or to the trustee of the insolvent estate, or if there is no such curator bonis or 
trustee, to the Master, demanded a return of the property.  
 
    (6) If any such property has been sold as part of the insolvent estate, the former owner of 
that property may recover from the trustee, before the confirmation of any trustee's account in 
the estate in terms of section one hundred and twelve , the net proceeds of the sale of that 
property (unless he has recovered the property itself from the purchaser), and thereupon he 
shall lose any right which he may have had to recover the property itself in terms of 
subsection (5).  

37     Effect of sequestration upon a lease  
 
    (1) A lease entered into by any person as lessee shall not be determined by the 
sequestration of his estate, but the trustee of his insolvent estate may determine the lease by 
notice in writing to the lessor: Provided that the lessor may claim from the estate, 
compensation for any loss which he may have sustained by reason of the non-performance of 
the terms of such lease.  
 
    (2) If the trustee does not, within three months of his appointment notify the lessor that he 
desires to continue the lease on behalf of the estate, he shall be deemed to have determined 
the lease at the end of such three months.  
 
    (3) The rent due under any such lease, from the date of the sequestration of the estate of 
the lessee to the determination or the cession thereof by the trustee, shall be included in the 
costs of sequestration.  
 
    (4) The determination of the lease by the trustee in terms of this section shall deprive the 
insolvent estate of any right to compensation for improvements, other than improvements 
made in terms of an agreement with the lessor, made on the leased property during the period 
of the lease.  
 

 (5) A stipulation in a lease that the lease shall terminate or be varied upon the 
sequestration of the estate of either party shall be null and void, but a stipulation in a lease 
which restricts or prohibits the transfer of any right under the lease or which provides for the 
termination or cancellation of the lease by reason of the death of the lessee or of his successor 
in title, shall bind the trustee of the insolvent estate of the lessee or of his successor in title, as 
if he were the lessee or the said successor, or the executor in the estate of the lessee or his 
said successor, as the case may be.  
[Sub-s. (5) substituted by s. 14 of Act 16 of 1943.]  

38     Effect of sequestration on contract of service  
 
    (1) The contracts of service of employees whose employer has been sequestrated are 
suspended with effect from the date of the granting of a sequestration order.  
 
    (2) Without limiting subsection (1), during the period of suspension of a contract of service 
referred to in subsection (1)-  
       (a)     an employee whose contract is suspended is not required to render services 
in terms of the contract and is not entitled to any remuneration in terms of 
the contract; and  
       (b)     no employment benefit accrues to an employee in terms of the contract of 
service which is suspended.  
 
    (3) An employee whose contract of service is suspended is entitled to unemployment 
benefits in terms of section 35 of the Unemployment Insurance Act, 1966 (Act 30 of 1966), 
from the date of such suspension, subject to the provisions of that Act.  
 
    (4) A trustee appointed in terms of section 56, or a liquidator appointed in terms of section 
375 of the Companies Act, 1973 ( Act 61 of 1973 ), or a liquidator who, in terms of section 74 
of the Close Corporations Act, 1984 ( Act 69 of 1984 ), remains in office after the first meeting 
and a co-liquidator, if any, appointed by the Master may terminate the contracts of service of 
employees, subject to subsections (5) and (7).  
 
    (5) A trustee may not terminate a contract of service unless the trustee has consulted with-  
       (a)     any person with whom the insolvent employer was required to consult, 
immediately before the sequestration, in terms of a collective agreement 
defined in section 213 of the Labour Relations Act, 1995 ( Act 66 of 1995 );  
       (b)     (i)     a workplace forum defined in section 213 of the Labour Relations 
Act, 1995; and  
          (ii)     any registered trade union whose members are likely to be affected 
by the termination of the contract of service,  
          if there is no such collective agreement that existed immediately prior to the 
sequestration;  
       (c)     a registered trade union representing employees whose contracts of service 
were suspended in terms of subsection (1) and who are likely to be 
affected by the termination of the contract of service, if there is no such 
workplace forum; or  
       (d)     the employees whose contracts of service were suspended in terms of 
subsection (1) and who are likely to be affected by the termination of the 
contract of service or their representatives nominated for that purpose, if 
there is no such trade union.  
 
    (6) The consultation referred to in subsection (5) must be aimed at reaching consensus on 
appropriate measures to save or rescue the whole or part of the business of the insolvent 
employer-  
       (a)     by the sale of the whole or part of the business of the insolvent employer; 
or  
       (b)     by a transfer as contemplated in section 197A of the Labour Relations Act, 

; or  
       (c)     by a scheme or compromise referred to in section 311 of the Companies 
Act, 1973; or  
       (d)     in any other manner.  
 
    (7) If any party referred to in subsection (5) wishes to make proposals concerning any 
matter contemplated in subsection (6), that party must submit written proposals to the trustee 
or liquidator within 21 days of the appointment of the trustee in terms of section 56, or the 
appointment of the liquidator in terms of section 375 of the Companies Act, 1973, or the 
appointment of a co-liquidator in terms of section 74 of the Close Corporations Act, 1984, or if 
a co-liquidator is not appointed, the date of the conclusion of the first meeting, unless the 
trustee or liquidator and an employee agree otherwise.  
 
    (8) A creditor of the insolvent employer may, with the consent of the trustee, participate in 
any consultation contemplated in this section.  
 
    (9) Unless the trustee or liquidator and an employee have agreed on continued employment 
of the employee in view of measures contemplated in subsection (6), all suspended contracts 
of service shall terminate 45 days after-  
       (a)     the date of the appointment of a trustee in terms of section 56; or  
       (b)     the date of the appointment of a liquidator in terms of section 375 of the 
Companies Act, 1973; or  
       (c)     the date of the appointment of a co-liquidator in terms of section 74 of the 
Close Corporations Act, 1984, or if a co-liquidator is not appointed, the 
date of the conclusion of the first meeting.  
 
    (10) An employee whose contract of service has been-  
       (a)     suspended in terms of subsection (1); or  
       (b)     terminated in terms of subsection (4) or (9),  
 
is entitled to claim compensation from the insolvent estate of his or her former employer for 
loss suffered by reason of the suspension or termination of a contract of service prior to its 
expiration.  
 
    (11) An employee whose contract of service terminates or has been terminated in terms of 
this section is entitled to claim severance benefits from the estate of the insolvent employer in 
accordance with section 41 of the Basic Conditions of Employment Act, 1997 ( Act 75 of 
1997 ).  
[S. 38 substituted by s. 1 of Act 33 of 2002.]  
47     Right of retention and landlord's legal hypothec  
 
    If a creditor of an insolvent estate who is in possession of any property belonging to that 
estate, to which he has a right of retention or over which he has a landlord's legal hypothec, 
delivers that property to the trustee of that estate, at the latter's request, he shall not thereby 
lose the security afforded him by his right of retention or lose his legal hypothec, if, when 
delivering the property, he notifies the trustee in writing of his rights and in due course proves 
his claim against the estate: Provided, that a right to retain any book or document of account 
which belongs to the insolvent estate or relates to the insolvent's affairs shall not afford any 
security or preference in connection with any claim against the estate.  

48     Proof of conditional claim  
 
    A creditor whose claim against an insolvent estate is dependent upon a condition, may 
prove that claim in the manner set forth in section forty-four but subject to the following 
provisions:-  
       (a)     If the condition is of such a nature that it will be fulfilled, if at all, within a 
year of the sequestration, the creditor may prove his claim, but he shall 
have no vote in respect of that claim at a meeting of creditors. If a 
dividend is awarded on such a claim it shall be paid by the trustee to the 
Master, who shall pay it to the creditor, if the condition has been fulfilled, 
and otherwise shall return it to the trustee for distribution among the other 
creditors.  
       (b)     If the condition is not such as is described in paragraph (a) , the creditor 
may call upon the trustee at a meeting of creditors to place a value upon 
the claim and the trustee shall thereupon lay before the officer presiding at 
that meeting a written valuation of the claim with the reasons therefor, and 
the presiding officer shall admit that claim at such value as he may 
determine, or reject it: Provided that when the condition has been fulfilled, 
before the confirmation, by the Master, in terms of section one hundred 
and twelve , of a trustee's account in the liquidation of the estate, the 
creditor may prove his claim as if it had been unconditional. 

 
49     Claims against partnership distinct from claims against partners  
 
    (1) When the estate of a partnership and the estates of the partners in that partnership are 
under sequestration simultaneously, the creditors of the partnership shall not be entitled to 
prove claims against the estate of a partner and the creditors of a partner shall not be entitled 
to prove claims against the estate of the partnership; but the trustee of the estate of the 
partnership shall be entitled to any balance of a partner's estate that may remain over after 
satisfying the claims of the creditors of the partner's estate in so far as that balance is required 
to pay the partnership's debts and the trustee of the estate of a partner shall be entitled to 
any balance of the partnership's estate that may remain over after satisfying the claims of the 
creditors of the partnership estate, so far as that partner would have been entitled thereto, if 
his estate had not been sequestrated.  
 
    (2) Nothing in this section shall be construed as preventing the Commissioner for the South 
African Revenue Service from proving in the manner provided in this Act a claim against the 
estate of a partnership in respect of any sum referred to in paragraph (b) of section one 
hundred and one , or any interest due on such sum.  
[Sub-s. (2) added by s. 21 of Act 6 of 1963, substituted by s. 12 of Act 99 of 1965, amended 
by s. 1 of Act 49 of 1996 and substituted by s. 5 of Act 69 of 2002.]  

50     Arrear interest. Debt due after sequestration  
 
    (1) When a debt bearing interest became due before the sequestration of the debtor's estate, the creditor to whom that debt is owing may include in his claim against the debtor's estate in respect of that debt any interest thereon, which is in arrear, to the date of the 
sequestration.  
 
    (2) If a person, before the sequestration of his estate, incurred a debt which is payable upon a date (hereinafter referred to as the due date) after the date of the sequestration, the creditor, towards whom the debt was incurred, may claim from the insolvent estate the full 
amount of that debt as if it were payable on the date of sequestration: Provided that if the debt bears no interest and a distribution account in the estate in question is confirmed by the Master in terms of section 112 before the due date, an amount shall be paid on that claim 
equal to the amount which would have been paid thereon under the distribution account if the debt had been payable on the date of sequestration, less eight per cent of that amount per annum, reckoned from the date of sequestration to the due date.  
[Sub-s. (2) amended by s. 5 of Act 101 of 1983.]  

51     Withdrawal of claim already proved against estate  
 
    (1) A creditor who has proved a claim against an insolvent estate may withdraw his claim by registered letters addressed to the Master and to the trustee and the latter shall in writing notify the other creditors of the withdrawal: Provided that the creditor so withdrawing his claim shall remain liable in terms of section one hundred and six for his pro rata share of the costs of sequestration and all costs lawfully incurred by the trustee in connection with the sequestration up to the time when he received the creditor's letter of withdrawal.  
 
    (2) A creditor who has so withdrawn his claim may, by registered notice addressed to the Master and to the trustee, cancel his withdrawal, but if he does so, he shall not become liable for any costs in connection with the sequestration for which he was not liable at the time of cancellation and he shall not be entitled to any payment out of the estate in respect of his claim until all the other creditors who have proved their claims have been paid in full.  
[Sub-s. (2) substituted by s. 13 of Act 99 of 1965.]  

52     Voting at meeting of creditors  
 
    (1) Save as in this section and in section forty-eight is otherwise provided, every creditor of an insolvent estate shall be entitled to vote at any meeting of the creditors of that estate as soon as his claim against the estate has been proved.  
 
    (2) The vote of any creditor shall be reckoned according to the value of his claim, except when it is provided in this Act that votes shall be reckoned in number.  
 
    (3) The vote of a creditor shall in co case be reckoned in number, unless his or her claim is of the value of at least R1 000.  
[Sub-s. (3) substituted by s. 6 of Act 101 of 1983 and by s. 21 (1) of Act 20 of 2001.]  
 
    (4) A creditor may not vote in respect of any claim which was ceded to him after the commencement of the proceedings by which the estate was sequestrated.  
 
    (5) A creditor holding any security for his claim shall, except in the election of a trustee and upon any matter affecting that security, be entitled to vote only in respect of the amount by which his claim exceeds the amount at which he valued his security when proving his claim, or if he did not value his security, in respect of the amount by which his claim exceeds the amount of the proceeds of the realization of his security in terms of section eighty-three .  
 
    (6) A creditor may not vote on the question as to whether steps should be taken to contest 
his claim or preference.  
[Sub-s. (6) added by s. 16 of Act 16 of 1943.]  

53     Questions upon which creditors may vote  
 
    (1) A creditor may vote at a meeting of creditors upon all matters relating to the 
administration of the estate, but may not vote in regard to matters relating to the distribution of the assets of the estate, except for the purpose of directing the trustee to contest, 
compromise or admit any claim against the estate.  
 
    (2) Subject to the provisions of section fifty-four and subsection (7) of section one hundred and nineteen , every matter upon which a creditor may vote shall be determined by the majority of votes reckoned in accordance with subsection (2) of section fifty-two , and every 
creditor may vote either personally or by an agent specially authorized thereto or acting under his general power of attorney: Provided that no creditor shall vote by any agent being-  
       (a)     the trustee or a person nominated for election as trustee in the estate 
concerned;  
       (b)     the employer or employee of such trustee or person;  
       (c)     the employee of any person or association of persons, whether corporate or 
unincorporate, by whom or by which such trustee or the person referred to 
in paragraph (a) is employed;  
       (d)     the spouse of or a person related to such trustee or the person referred to 
in paragraph (a) by consanguinity or affinity within the third degree; or  
       (e)     a person directly or indirectly having a pecuniary interest in the 
remuneration of such trustee or the person referred to in paragraph (a) .  
[Sub-s. (2) substituted by s. 14 (a) of Act 99 of 1965.]  
 
    (3) Every resolution of creditors at a meeting of creditors and the result of the voting on 
any matter as declared by the officer presiding at that meeting, shall be recorded upon the 
minutes of the meeting and shall be binding upon the trustee in so far as it is a direction to 
him; and no other direction of creditors shall be binding upon him.  
 
    (4) Any direction by creditors which infringes the rights of any creditor may be set aside by 
the court on the application of the creditor whose rights are affected or of the trustee with the 
consent of the Master.  
 
    (5) The majority of creditors (reckoned in number and in value) may direct the trustee to 
employ or not to employ a particular attorney or auctioneer in connection with the 
administration of the estate and if the trustee has reason to believe that it will not be in the 
interests of the estate to carry out such direction, he may submit the matter to the Master, 
whose decision, after considering any representations in writing by the trustee and the 
creditors, shall be final.  
[Sub-s. (5) substituted by s. 14 (b) of Act 99 of 1965.]  

54     Election of trustee  
 
    (1) At the first meeting of the creditors of an insolvent estate the creditors who have proved 
their claims against the estate may elect one or two trustees.  
 
    (2) Any person who has obtained a majority in number and in value of the votes of the 
creditors entitled to vote, who voted at such meeting, shall be elected trustees.  
 
    (3) If no person has obtained such a majority of votes then-  
       (a)     the person who has obtained a majority of votes in number, when no other 
person has obtained a majority of votes in value, or has obtained a 
majority of votes in value, when no other person has obtained a majority 
of votes in number, shall be deemed to be elected sole trustee;  
       (b)     if one person has obtained a majority of votes in value and another a 
majority of votes in number, both such persons shall be deemed to be 
elected trustees, and if either person declines a joint trusteeship, the other 
shall be deemed to be elected sole trustee.  
 
    (4) For the purposes of this section 'majority of votes in number' means a greater number 
of votes (apart from the value of the claims which they represent, but subject to the provisions 
of subsection (3) of section fifty-two) than has been obtained by any competitor and 'majority 
of votes in value' means votes representing claims of a greater aggregate value than the votes 
obtained by any competitor.  
 
 (5) If at any meeting of creditors convened for the purpose of electing a trustee, no trustee 
is elected and the estate is not vested at the time of that meeting in a provisional trustee, the 
Master may, in accordance with policy determined by the Minister, appoint a trustee and if he 
or she does not so appoint a trustee, the Master or the insolvent with the Master's consent, 
may apply, at the cost of the estate, to the court by petition to set aside the sequestration and 
the court may make such order thereon as it thinks fit.  
[Sub-s. (5) substituted by s. 5 of Act 16 of 2003.]  

55     Persons disqualified from being trustees  
 
    Any of the following persons shall be disqualified from being elected or appointed a trustee-  
       (a)     any insolvent;  
       (b)     any person related to the insolvent concerned by consanguinity or affinity 
within the third degree;  
       (c)     a minor or any other person under legal disability;  
       (d)     any person who does not reside in the Republic;  
[Para. (d) amended by s. 17 of Act 16 of 1943.]  
       (e)     any person who has an interest opposed to the general interest of the 
creditors of the insolvent estate;  
       (f)     a former trustee disqualified under section seventy-two ;  
       (g)     any person declared under section fifty-nine to be incapacitated for election 
as trustee, while any such incapacity lasts, or any person removed by the 
court, on account of misconduct, from an office of trust;  
       (h)     a corporate body;  
       (i)     any person who has at any time been convicted (whether in the Republic or elsewhere) of theft, fraud, forgery or uttering a forged document, or 
perjury and has been sentenced to imprisonment without the option of a fine, or to a fine exceeding R2 000;  
[Para. (i) substituted by s. 21 (1) of Act 20 of 2001.]  
       (j)     any person who was, at any time, a party to an agreement or arrangement with any debtor or creditor whereby he undertook that he would, when performing the functions of a trustee or assignee, grant or endeavour to grant to, or obtain or endeavour to obtain for any debtor or creditor any benefit not provided for by law;  
       (k)     any person who has by means of any misrepresentation or any reward or offer of any reward, whether direct or indirect, induced or attempted to induce any person to vote for him as trustee or to effect or assist in effecting his election as trustee of any insolvent estate;  
       (l)     any person who at any time during a period of twelve months immediately preceding the date of sequestration acted as the bookkeeper, accountant or auditor of the insolvent;  
[Para. (l) inserted by s. 15 of Act 99 of 1965.]  
       (m)     any agent authorized specially or under a general power of attorney to vote for or on behalf of a creditor at a meeting of creditors of the estate concerned and acting or purporting to act under such special authority or general power of attorney.  
[Para. (m) added by s. 15 of Act 99 of 1965.]  

56     Appointment of trustee. Security for his administration  
 
    (1) If a trustee was elected at a meeting of creditors at which a person other than the Master presided, the election shall not be valid unless it has been confirmed by the Master. 
    (2) Subject to the provisions of section fifty-seven , the Master shall, when a person so elected has given security to his satisfaction for the proper performance of his duties as trustee, confirm his election and appoint him as trustee by delivering to him a certificate of 
appointment, which shall be valid throughout the Republic.  
[Sub-s. (2) amended by s. 18 of Act 16 of 1943 and substituted by s. 16 (a) of Act 99 of 
1965.]  
 
    (3) On receipt of his certificate of appointment the trustee shall notify his appointment and address in the Gazette .  
 
    (4) When two trustees have been appointed or when the Master has appointed a co-trustee in terms of section 57 (5) both or all three trustees shall act jointly in performing their functions as trustees and each of them shall be jointly and severally liable for every act 
performed by them jointly.  
 
[NB: Sub-s. (4) has been substituted by s. 1 of the Insolvency Amendment Act 89 of 1989, 
which is not yet in operation. See PENDLEX . ]  
 
    (5) Whenever the trustees in the estate disagree on any matter relating to the estate of which they are trustees, the matter shall be referred to the Master who shall determine the question in issue or give directions as to the procedure to be followed for the determination 
thereof.  
[Sub-s. (5) substituted by s. 16 (b) of Act 99 of 1965.]  
 
    (6) Subject to the provisions of subsection (1) of section eighty-nine the cost of giving the security mentioned in subsection (2), to an amount which the Master considers reasonable, shall be paid out of the estate in question as part of the costs of sequestration.  
 
    (7) When a trustee has, in the course of liquidating an insolvent estate accounted to the Master, to his satisfaction, for any property in the estate, the Master may consent to a reduction of the security mentioned in subsection (2) if he is satisfied that the reduced security 
will suffice to indemnify the estate or the creditors thereof against any maladministration by the trustee of the remaining property in the estate.  

57     Appointment of trustee or co-trustee by Master  
 
    (1) If a person who has been elected as trustee was not properly elected or is disqualified, under section fifty-five , from being elected or appointed a trustee or is disqualified from being a trustee of the estate in question or has failed to give within a period of seven days as from the date upon which he was notified that the Master had confirmed his election, or within such further period as the Master may allow, the security mentioned in subsection (2) of section fifty-six or if in the opinion of the Master the person elected as trustee should not be appointed as trustee to the estate in question, the Master shall give notice in writing to the person so elected that he declines to confirm his election or to appoint him as trustee and shall, in that notice, state his reason for declining to confirm his election or to appoint him: Provided that if the Master declines to confirm the election of a trustee because he is of the opinion that the person elected should not be appointed as trustee, it shall be sufficient if the Master states, in that notice, as such reason, that he is of the opinion that the person elected should not be appointed as trustee to the estate in question.  
[Sub-s. (1) substituted by s. 17 (a) of Act 99 of 1965.]  
 
    (2) When the Master has declined to confirm the election of a trustee or to appoint a person elected as a trustee, or the Minister has under subsection (9) set aside the appointment of a trustee, the Master shall in accordance with the provisions of subsections (1) and (2) of section forty convene a meeting of creditors of the estate in question for the purpose of electing another trustee in the place of the person whose election as a trustee the Master declined to confirm or whom the Master declined to appoint or whose appointment as trustee has been so set aside. In the notice convening the meeting the Master shall state that he has declined to confirm the election of the person previously elected as trustee, or to appoint the person so elected, and the reasons therefor (but subject to the proviso to subsection (1)), or that the appointment of the person previously appointed as trustee has been set aside by the Minister, as the case may be, and that the meeting is convened for the purpose of electing another trustee. The Master shall post a copy of the notice to every creditor whose claim against the estate was previously proved and admitted.  
[Sub-s. (2) substituted by s. 17 (a) of Act 99 of 1965.]  
 
    (3) A meeting mentioned in subsection (2) shall be deemed to be the continuation of a first meeting of creditors held after an adjournment thereof.  
 
    (4) If the Master declines, for any reason mentioned in subsection (1), to confirm the election of a person who was elected as trustee at a meeting mentioned in subsection (2), or to appoint a person so elected, he or she shall act in accordance with the provisions of 
subsection (1) and thereupon, if the person whose election the Master declined to confirm or whom the Master declined to appoint, was elected as sole trustee, or if two trustees were elected and the Master did not appoint both or one of them, the Master shall, in accordance 
with policy determined by the Minister, appoint as trustee of the estate in question any other person who is not disqualified from being a trustee of that estate.  
[Sub-s. (4) substituted by s. 6 (a) of Act 16 of 2003.]  
 
    (5) Whenever the Master considers it desirable, he or she may, in accordance with policy determined by the Minister, appoint a person not disqualified from holding the office of trustee who has given the security mentioned in section 56 (2) as a co-trustee with the trustee or 
trustees of an insolvent estate.  
[Sub-s. (5) substituted by s. 6 (b) of Act 16 of 2003.]  
 
[NB: Sub-s. (5) has been substituted by s. 2 of the Insolvency Amendment Act 89 of 1989, a provision which will be put into operation by proclamation. See PENDLEX . ]  
 
    (6) All the provisions of this Act, relating to a trustee shall apply to a trustee or a co-trustee appointed by the Master under this section.  
 
    (7) Any person aggrieved by the appointment of a trustee or the refusal of the Master to confirm the election of a trustee or to appoint a person elected as a trustee, may within a period of seven days from the date of such appointment or refusal request the Master in 
writing to submit his or her reasons for such appointment or refusal to the Minister.  [Sub-s. (7) added by s. 17 (b) of Act 99 of 1965 and substituted by s. 6 (c) of Act 16 of 2003.]  
 
    (8) The Master shall within seven days of the receipt by him of the request referred to in subsection (7) submit to the Minister, in writing, his reasons for such appointment or refusal together with any relevant documents, information or objections received by him.  
[Sub-s. (8) added by s. 17 (b) of Act 99 of 1965.]  
 
    (9) The Minister may after consideration of the reasons referred to in subsection (8) and any representations made in writing by the person who made the request referred to in subsection (7) and of all relevant documents, information or objections submitted to him or 
the Master by any interested person, confirm, uphold or set aside the appointment or the refusal by the Master and, in the event of the refusal by the Master being set aside, direct the Master to confirm the election of the trustee concerned and to appoint him as trustee to the 
estate in question.  
[Sub-s. (9) added by s. 17 (b) of Act 99 of 1965.]  
 
    (10) The decision of the Minister under subsection (9) shall be final.  
[Sub-s. (10) added by s. 17 (b) of Act 99 of 1965.]  

58     Vacation of office of trustee  
 
    A trustee shall vacate his office-  
       (a)     if his estate is sequestrated under this Act; or  
      (b)     if an order is issued under the law relating to mental disorders for his reception and detention in an institution, or if he is declared by a 
competent court to be incapable of managing his own affairs; or  
       (c)     if he is convicted of any offence and sentenced to serve any term of imprisonment without the option of a fine, or if he is convicted (whether in the Republic or elsewhere) of theft, fraud, forgery or uttering a forged 
document, or perjury.  

59     Court may declare a person disqualified from being a trustee, or remove a trustee  
 
    On the application of any person interested the court may either before or after the appointment of a trustee, declare that the person appointed or proposed is disqualified from holding the office of trustee, and, if he has been appointed, may remove him from office and 
may in either case declare him incapable of being elected or appointed trustee under this Act during the period of his life or such other period as it may determine, if-  
       (a)     he has accepted or expressed his willingness to accept from any person engaged to perform any work on behalf of the estate in question, any benefit whatever in connection with any matter relating to that estate; or  
       (b)     in order to induce a creditor to vote for him at the election of a trustee or in 
return for his vote at such election, or in order to exercise any influence upon his election as trustee, he has-  
          (i)     wrongfully omitted or included or been privy to the wrongful omission 
or inclusion of the name of a creditor from any record by this Act 
required; or  
          (ii)     directly or indirectly given or offered or agreed to give to any person 
any consideration; or  
          (iii)     offered to or agreed with any person to abstain from investigating any previous transactions of the insolvent concerned; or  
          (iv)     been guilty of or privy to the splitting of claims for the purpose of 
increasing the number of votes.  

60     Removal of trustee by Master  
 
    The Master may remove a trustee from his office on the ground-  
       (a)     that he was not qualified for election or appointment as trustee or that his election or appointment was for any other reason illegal, or that he has become disqualified from election or appointment as a trustee or has been authorized, specially or under a general power of attorney, to vote for or on behalf of a creditor at a meeting of creditors of the insolvent estate of which he is the trustee and has acted or purported to act under such special authority or general power of attorney; or         
(b)     that he has failed to perform satisfactorily any duty imposed upon him by 
this Act or to comply with a lawful demand of the Master; or  
       (c)     that he is mentally or physically incapable of performing satisfactorily his 
duties as trustee; or  
       (d)     that the majority (reckoned in number and in value) of creditors entitled to 
vote at a meeting of creditors has requested him in writing to do so; or  
       (e)     that, in his opinion, the trustee is no longer suitable to be the trustee of the 
estate concerned.  
[S. 60 substituted by s. 18 of Act 99 of 1965.]  
61     Leave of absence or resignation of trustee  
 
    At the request of a trustee the Master may permit him to be absent from the Republic for a 
period longer than 60 days or may relieve him of his office, in either case upon such conditions 
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be so absent from the Republic or to resign as the Master may direct.  
[S. 61 substituted by s. 7 of Act 101 of 1983. 

[S. 144 substituted by s. 22 of Act 101 of 1983.]  
145     Obstructing trustee  
 
    Any person who obstructs or hinders a curator bonis appointed under this Act or a trustee or a representative of either in the performance of his functions as such shall be guilty of an offence and liable to a fine not exceeding R500, or to imprisonment without the option of a fine for a period not exceeding six months.  
[S. 145 substituted by s. 23 of Act 101 of 1983.]  

146     Evidence of liability incurred by insolvent  
 
    Whenever in any criminal proceedings under this Act any liability incurred by an insolvent or the date or time when the liability was incurred, is in issue or relevant to the issue, proof that a claim in respect of that liability has been admitted against the estate of the insolvent in accordance with any provision of this Act shall be sufficient evidence of the existence of the liability and any such liability shall be deemed to have been incurred upon the date or at the time alleged in any document submitted in accordance with any provision of this Act in support of that claim: Provided that the accused or the prosecutor in those proceedings may prove that no such liability or that a lesser or a greater liability was incurred or that it was incurred on a date or at a time other than the date or time so alleged.  

147     Offences committed by insolvent in different provinces may be tried at his place of business or residence  

 
    (1) Any court of law which has jurisdiction to try an insolvent in respect of an offence under this Act committed at the place where the insolvent mainly carried on business or resided at the time of the commission of the offence, shall have jurisdiction to try the insolvent in respect of such an offence committed anywhere in the Republic.  
 
    (2) In subsection (1) 'insolvent' includes a person who is liable under subsection (1) of 
section one hundred and forty-three .  
148     ......  
[S. 148 amended by s. 34 of Act 16 of 1943 and repealed by s. 24 of Act 101 of 1983.]  
149     Jurisdiction of the court  
 
    (1) The court shall have jurisdiction under this Act over every debtor and in regard to the estate of every debtor who-  
       (a)     on the date on which a petition for the acceptance of the surrender or for the sequestration of his estate is lodged with the registrar of the court, is domiciled or owns or is entitled to property situate within the jurisdiction of the court; or  
       (b)     at any time within twelve months immediately preceding the lodging of the petition ordinarily resided or carried on business within the jurisdiction of the court:  
 
Provided that when it appears to the court equitable or convenient that the estate of a person domiciled in a State which has not been designated in terms of section 2 of the Cross-Border Insolvency Act, 2000 ( Act 42 of 2000 ), should be sequestrated by a court outside the Republic, or that the estate of a person over whom it has jurisdiction be sequestrated by another court within the Republic, the court may refuse or postpone the acceptance of the surrender or the sequestration.  
[Sub-s. (1) amended by s. 33 of Act 42 of 2000 and by s. 2 of Act 42 of 2001.]  
 
    (2) The court may rescind or vary any order made by it under the provisions of this Act.  

150     Appeal  
 
    (1) Any person aggrieved by a final order of sequestration or by an order setting aside an order of provisional sequestration may, subject to the provisions of section 20 (4) and (5) of the Supreme Court Act, 1959 ( Act 59 of 1959 ), appeal against such order.  

    (2) Such appeal shall be noted and prosecuted as if it were an appeal from a judgment or order in a civil suit given by the court which made such final order or set aside such provisional order, and all rules applicable to such last-mentioned appeal shall mutatis mutandis but 
subject to the provisions of subsection (3), apply to an appeal under this section.  
 
    (3) When an appeal has been noted (whether under this section or under any other law), against a final order of sequestration, the provisions of this Act shall nevertheless apply as if no appeal had been noted: Provided that no property belonging to the sequestrated estate shall be realized without the written consent of the insolvent concerned.  
 
    (4) If an appeal against a final order of sequestration is allowed, the court allowing such appeal may order the respondent to pay the costs of sequestrating and administering the estate.  
 
    (5) There shall be no appeal against any Order made by the court in terms of this Act, except as provided in this section.  
[Sub-s. (5) added by s. 35 of Act 16 of 1943.]  

151     Review  
 
    Subject to the provisions of section fifty-seven any person aggrieved by any decision, 
ruling, order or taxation of the Master or by a decision, ruling or order of an officer presiding at 
a meeting of creditors may bring it under review by the court and to that end may apply to the 
court by motion, after notice to the Master or to the presiding officer, as the case may be, and 
to any person whose interests are affected: Provided that if all or most of the creditors are 
affected, notice to the trustee shall be deemed to be notice to all such creditors; and provided 
further that the court shall not re-open any duly confirmed trustee's account otherwise than as 
is provided in section one hundred and twelve .  
[S. 151 amended by s. 44 of Act 99 of 1965.]  

151 bis     Costs of review  
 
    If the court reviewing any matter referred to in section one hundred and fifty-one confirms any decision, ruling, order or taxation of the Master or officer referred to in that section the costs of the applicant for the review of that matter shall not be paid out of the assets of the 
estate concerned unless the Court otherwise directs.  
[S. 151 bis inserted by s. 45 of Act 99 of 1965.]  
152     Master may direct trustee to deliver documents or property or call upon any person to furnish certain information  
 
    (1) The Master may at any time direct a trustee to deliver to him any book or document relating or any property belonging to the insolvent estate of which he is trustee.  
 
    (2) If at any time after the sequestration of the estate of a debtor and before his rehabilitation, the Master is of the opinion that the insolvent or the trustee of that estate or any other person is able to give any information which the Master considers desirable to 
obtain, concerning the insolvent, or concerning his estate or the administration of the estate or concerning any claim or demand made against the estate, he may by notice in writing delivered to the insolvent or the trustee or such other person summon him to appear before 
the Master or before a magistrate or an officer in the public service mentioned in such notice, at the place and on the date and hour stated in such notice, and to furnish the Master or other officer before whom he is summoned to appear with all the information within his knowledge concerning the insolvent or concerning the insolvent's estate or the administration of the estate.  
[Sub-s. (2) substituted by s. 46 of Act 99 of 1965.]  
 
    (3) After having interrogated the person summoned as aforesaid the Master or other officer concerned may deliver to him a written notice to appear again before the Master or other officer at a place and upon a date and hour stated in such notice and to submit to the Master 
I
..or such other officer any further information or any book or document specified in such notice.  
 
    (4) When any person summoned as aforesaid appears before the Master or other officer in question in compliance with a notice issued under subsection (2) or (3) the Master or such other officer may administer the oath to him and the Master or such other officer and if a 
person other than the trustee was summoned, also the trustee (or his agent) may interrogate the person summoned in regard to any matter relating to the insolvent or his estate or the administration of the estate.  
 
    (5) The provisions of subsection (2) of section 65 shall, subject to subsection (2A) of that section, mutatis mutandis apply in connection with the production of any book or document or with the interrogation of any person under the preceding provisions of this section.  
[Sub-s. (5) substituted by s. 4 of Act 89 of 1989.]  
 
    (6) The provisions of section sixty-six shall mutatis mutandis apply in connection with a person summoned, and with his interrogation, under this section and the Master or other officer concerned shall, with reference to a person so summoned or with reference to such 
interrogation, have the powers and immunity conferred upon an officer mentioned in section sixty-six .  
 
    (7) The provisions of subsection (7) of section sixty-five shall mutatis mutandis apply in connection with any person (other than a trustee) who has been summoned under this section for the purpose of furnishing any information: Provided that if there are no assets in the estate in question sufficient to pay the witness fees in question, those fees shall be paid by the State.  

153     Fees of office and certain costs  
 
    (1) The Master shall recover in respect of the several matters and in the manner mentioned in the Third Schedule to this Act the fees therein specified.  [Sub-s. (1) amended by s. 21 (a) of Act 62 of 1955.]  
 
    (1) bis The Minister may from time to time by notice in the Gazette amend the said Third Schedule.  
[Sub-s. (1) bis inserted by s. 21 (b) of Act 62 of 1955, amended by ss. 46 and 47 of Act 97 of 
1986 and substituted by s. 11 of Act 16 of 2003.]  
 
    (2) Any expenses incurred by the Master or by an officer who is to preside or presides or has presided at a meeting of the creditors of an insolvent estate in the protection of the assets of an insolvent estate or in carrying out any provision of this Act shall, unless the court 
otherwise orders, be regarded as part of the costs of the sequestration of that estate.  

154     Custody of documents. Admissibility of copies or certificates  
 
    (1) The Master shall have the custody of all documents relating to insolvent estates.  
 
    (2) If there is endorsed upon or attached to any document or record a certificate purporting to have been signed by a person describing himself as Master, wherein he describes the nature of the document or record and states that it relates to a specified insolvent or insolvent estate, that document or record shall on its mere production by any person prima facie be deemed to be what the certificate describes it to be.  
 
    (3) Any document or record upon which there is endorsed or to which there is attached a statement purporting to have been signed by a person describing himself as Master, wherein he certifies that the document or record is a true copy of or extract from a document or record relating to a specified insolvent or insolvent estate, and wherein he describes the nature of the original document or record, shall on its mere production by any person be as admissible in evidence in any court of law and be of the same force and effect as the original document or record would be if it bore or had attached to it the certificate mentioned in subsection (2).  
 
    (4) A certificate, purporting to have been signed by a person describing himself as Master, stating that the estate of a person or partnership mentioned therein was sequestrated on a date therein specified, or that an insolvent named therein has or has not been rehabilitated, or that any person named therein has or has not complied with any particular requirement of this 
Act, shall upon its mere production by any person be received as prima facie evidence of the 
facts therein stated.  

155     Destruction of documents  
 
    (1) After six months have elapsed as from the confirmation by the Master of the final trustees' account in any insolvent estate, the trustee may, with the consent in writing of the Master, destroy all books and documents in his possession relating to the estate.  
 
    (2) After five years have elapsed as from the rehabilitation of an insolvent the Master may destroy all records in his office relating to the estate of that insolvent.  
 
    (3) This section shall apply to all insolvent estates which have been finally liquidated or are in course of liquidation at the commencement of this Act.  
156     Insurer obliged to pay third party's claim against insolvent  
 
    Whenever any person (hereinafter called the insurer) is obliged to indemnify another person (hereinafter called the insured) in respect of any liability incurred by the insured towards a third party, the latter shall, on the sequestration of the estate of the insured, be entitled to 
recover from the insurer the amount of the insured's liability towards the third party but not exceeding the maximum amount for which the insurer has bound himself to indemnify the insured.  

157     Formal defects  
 
    (1) Nothing done under this Act shall be invalid by reason of a formal defect or irregularity, 
unless a substantial injustice has been thereby done, which in the opinion of the court cannot 
be remedied by any order of the court.  
 
    (2) No defect or irregularity in the election or appointment of a trustee shall vitiate anything 
done by him in good faith.  

158     Regulations and policy  
 
    (1) The Minister may from time to time make regulations not inconsistent with the 
provisions of this Act, prescribing-  
       (a)     the procedure to be observed in any Master's office in connection with 
insolvent estates;  
       (b)     the form of, and manner of conducting proceedings under this Act;  
       (c)     the manner in which fees payable under this Act shall be paid and brought 
to account.  
 
    (2) The Minister may determine policy for the appointment of a curator bonis , trustee, 
provisional trustee or co-trustee by the Master in order to promote consistency, fairness, 
transparency and the achievement of equality for persons previously disadvantaged by unfair 
discrimination.  
 
    (3) Any policy determined in accordance with the provisions of subsection (2) must be 
tabled in Parliament before publication in the Gazette .  
[S. 158 amended by s. 46 of Act 97 of 1986 and substituted by s. 12 of Act 16 of 2003.]  
158 bis     Minister may amend First Schedule  
 
    The Minister may by notice in the Gazette amend the First Schedule.  
[S. 158 bis inserted by s. 13 of Act 50 of 1956, amended by ss. 46 and 47 of Act 97 of 1986 and substituted by s. 13 of Act 16 of 2003.]  
158 ter     ......  
[S. 158 ter inserted by s. 47 of Act 99 of 1965 and repealed by s. 1 of Act 49 of 1996.]  

159     Short title and date of commencement  
This Act shall be called the Insolvency Act, 1936, and shall come into operation on the first 
day of July, 1936.   

Over the years we have noticed that many people either mistype or misspell the word bankruptcy - so we have put to together a list of the most common errors: - Bankrupty
Bancraptcy
Bancrupsty
Bankrupcy
Bancrupsy
Bakruptcy
Bankrupsy
Bancruptcy
Bakrupcy
Bancrupcy
Bancruptsy
Bakruptsy
Bankruptsy 

If you would like any further information and advice about South-African bankruptcy law and the possible alternatives to going bankrupt, please click here. An Attorney can advise on all aspects of bankruptcy law including the Disadvantages of Bankruptcy, how to apply for Bankruptcy, How to Avoid Bankruptcy and the Effects of Bankruptcy.

If you're facing financial difficulties, understanding what constitutes an "act of insolvency" is crucial. Committing such an act, often unintentionally, can empower creditors to initiate legal proceedings against you.

What is an Act of Insolvency?
An act of insolvency refers to any of eight specific actions by a debtor that legally signal insolvency, thereby allowing creditors to apply for compulsory sequestration. If you perform any of these acts, it's presumed in law that you're insolvent, giving creditors grounds to take you to court.

Eight Acts That Signal Insolvency:

1. Offer of Settlement: Writing to a creditor admitting debt and proposing to settle for less than the full amount can be seen as an admission of insolvency.
2. Written Notice of Inability to Pay: Formally stating in writing that you cannot pay your debts is a direct act of insolvency. Avoid written confessions of inability to pay.
3. Absconding: Leaving your residence or the country to evade debt repayment. Proving intent can be challenging for creditors, but it's still risky.
4. Failure to Satisfy a Judgment: If a creditor obtains a judgment against you and you lack assets for seizure, this can lead to a sequestration application.
5. Preferential Treatment of Creditors: Paying one creditor while leaving others unpaid can be considered an act of insolvency by the neglected creditors.
6. Non-Completion of Voluntary Sequestration: After announcing your intent to sequestrate voluntarily, failure to follow through allows creditors to pursue compulsory sequestration.
7. Business Sale Without Debt Payment: Advertising the sale of your business but not settling debts owed can imply insolvency, leading to business liquidation or personal sequestration if you're a sole proprietor.
8. Concealing Assets: Hiding or selling assets to avoid them being seized by creditors is an immediate act of insolvency.

Why This Matters:

Understanding these acts is vital because they can inadvertently trigger legal actions that might worsen your financial situation. If you're struggling with debt, it's wise to seek legal advice rather than taking steps that might legally define you as insolvent.

Next Steps:
If you find yourself in financial distress, consider consulting with legal professionals who can guide you through your options without inadvertently committing an act of insolvency. Contact our legal team for tailored advice on managing your debts effectively.

If your company faces insurmountable financial challenges with no options for restructuring or rescue, liquidation might be the only path forward. Under South Africa's Companies Act No 61 of 1973, continuing to trade while insolvent is illegal. Even if your company lacks the assets to cover all debts, it must stop trading, enter business rescue, or proceed to liquidation. Here's a concise overview of the liquidation process in South Africa:The Liquidation Process:

• Decision to Liquidate: Set a final trading day once you or your board decide on liquidation. After this date, any trading must benefit creditors.
• Appointment of a Liquidator: A liquidator is appointed to manage the winding-up process, which includes evaluating assets and liabilities, selling assets, and distributing proceeds to creditors based on their status (secured, unsecured, preferred).
• Cessation of Business: Your company will cease to exist. You'll lose director powers, and employees will be retrenched following legal procedures. Understanding these steps and seeking legal advice early in the process is crucial.
• Protection from Creditors: Once liquidation proceedings start, creditors cannot take further legal action against the company. The liquidator manages all debts.
• Contract Handling: The liquidator decides whether to fulfil existing contracts. If no decision is made, contracts are considered void. For leases, this decision must be made within 90 days.
• Creditor Prioritization: It is crucial to understand who gets paid first. Directors' personal liability only arises if they have signed as surety for company debts.
  
  

WHERE TO GET HELP WITH UNDERSTANDING THE LIQUIDATION PROCESS IN SOUTH AFRICA
It is vital to avoid mistakes and delays in your company's liquidation. Our expert insolvency attorneys are here to guide you through the process in South Africa, ensuring you navigate this complex phase with confidence and compliance. Reach out today for personalized assistance in understanding and initiating the liquidation process and taking the first step towards resolving your company's debt issues.