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Summary Insolvency Law: Administration of the insolvent estate and meetings of creditors
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Insolvency Law: Administration of the insolvent estate and meetings of creditors
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Yolandi Cloete©ISR 310
STUDY THEMES 5-7
Nagel et al ‘Commercial Law’ 5th Edition
ADMINISTRATION OF INSOLVENT ESTATE
CHAPTER 35
Trustee must take charge of the insolvent estate
(page 573)
The trustee:
• Elected at creditors first meeting
• Majority vote
• Certificate of appointment
➢ Grounds of disqualification (page 574):
• Legal disability
• Does not reside in RSA
• Corporate body
• Minor/unrehabilitated insolvent
• Bookkeeper, accountant and auditor of the insolvent for a
period of 12 months preceding sequestration
• Unlawfully used or retained money of insolvent estate
• Person convicted of theft, fraud, forgery
• Giving favours to certain creditors ito an agreement or
arrangement
• Misrepresentation
• Induced any person to vote for him or her as trustee
➢ Vacation of office of trustee and remuneration of trustee (page 575)
➢ Leave of absence or resignation of trustee page (page 576)
➢ Election of new trustee (page 576)
➢ Remuneration of trustee (page 576)
1
, Yolandi Cloete©
NO DUTIES OF TRUSTEE (PAGES 576-578)
1 Publish notice in Government Gazette confirming appointment
Call on debtors of insolvent estate to pay debts at certain time failing which debt
must be collected immediately
2 Take charge of all movable property, books and documents as soon as sheriff
completed inventory
Must get property valued
Search and seizure warrant
3 Check whether claim made by creditor is due and owing
Let Master know in writing of claim is disputed
4 Open cheque account for and in the name of estate
Pay all amounts receive immediately into account
Amounts exceeding R40 must be deposited within a day
Fails to do so? = must pay double the amount
Transfer from one bank to other? = notify Master
Transfer to interest bearing account if money is not needed immediately? = consent
of Master
Master may inspect the books
5 Must record all amounts paid or received
Must record all books, documents and accounts received
Master may inspect records
6 May not use assets of any other purpose than for the benefit of the insolvent estate
May not allow co-trustee to use the assets for any other purpose
Will pay a fine double than the value of the asset used
7 Must call for special meetings of creditors when creditors request it
Must hold second meeting ito section 40
Additional general meetings upon request by the Master or if at least one quarter of
the creditors request it
8 Must investigate insolvent’s affairs and report back at the second meeting or within
one month upon acceptance of the composition
Must report on the assets and liabilities + causes and reasons for insolvency
Read list of other things trustee must investigate on pages 577-578
9 Must liquidate and realise assets on instruction of creditors
Distribute proceeds and collect contributions
10 Lodge liquidation and distribution account with Master within 6 months from date of
appointment unless period is extended by the Master
11 Must ascertain whether correct information has been included in the sequestration
order and if not must take all reasonable steps to obtain such information
2
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