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MTHEMBU & CO ATTORNEYS
Practice Area
Guiding clients through sequestration, liquidation, and business rescue proceedings.
Insolvency law deals with the legal processes available when an individual or entity is unable to pay their debts. In South Africa, the primary legislation governing insolvency is the Insolvency Act 24 of 1936 (for individuals and partnerships) and the Companies Act 71 of 2008 (for companies and close corporations, including business rescue proceedings).
P A Mthembu Attorneys advises and represents clients in aspects of insolvency, whether seeking relief from overwhelming debt or pursuing claims against insolvent individuals or entities. The firm handles both voluntary and compulsory sequestration applications, voluntary and compulsory liquidation of companies, and business rescue proceedings.
For individuals, voluntary surrender (sequestration) of an estate may be the most appropriate route to obtaining relief from unmanageable debt. The firm assists clients with the application process and ensures compliance with the statutory requirements.
For businesses in financial distress, the Companies Act provides for business rescue proceedings, a process designed to rehabilitate a financially distressed company by placing it under temporary supervision and developing a business rescue plan. The firm advises both companies entering business rescue and affected creditors.
What is the difference between sequestration and liquidation?
Sequestration applies to the estate of a natural person (individual). Liquidation applies to a company or close corporation. Both processes involve the realisation of assets to pay creditors, but the applicable legislation and procedures differ.
What are the consequences of sequestration?
Sequestration has significant legal consequences. You will lose control of your estate assets, you may not enter into credit agreements without the trustee's consent, and you are disqualified from holding certain positions (such as company director) until you are rehabilitated.
What is business rescue?
Business rescue, provided for in Chapter 6 of the Companies Act, is a process that places a financially distressed company under temporary supervision to develop and implement a plan to rescue the company, or if that is not possible, to achieve a better return for creditors than immediate liquidation.
How long does rehabilitation take?
A sequestrated individual may apply for rehabilitation after a minimum period of four years from the date of sequestration (or 10 years for automatic rehabilitation). The court has discretion to grant or refuse the application based on the circumstances.
Whether you need representation or want to understand your options, get in touch.
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