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Summary Insolvency - Topic 5
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Topic 5: Collection of the Estate Assets..................................................................25.1 The preservation of the estate pending the appointment of a trustee...................2
5.2 The election of the trustee.........................................................................................4
5.3 The rights and duties of the trustee..........................................................................6
5.4 The duties of the insolvent........................................................................................7
5.5 Impeachable Dispositions..........................................................................................7
Disposition made for no value....................................................................................................... 9
Voidable Preference.................................................................................................................... 11
Undue Preference....................................................................................................................... 12
Collusion..................................................................................................................................... 12
Section 34 Dispositions............................................................................................................... 13
Comparison................................................................................................................................. 15
Prescribed Cases.....................................................................................................15
Button v Akbur................................................................................................................ 15
Cooper v Merchant Trade Finance................................................................................18
Duet and Magnum Financial Services CC v Koster.....................................................20
Gainsford v Tiffski Property Investments.....................................................................22
Gazit Properties v Botha................................................................................................24
Gore v Shell South Africa..............................................................................................26
Joosab v Ensor............................................................................................................... 28
Louw v Sobabini............................................................................................................. 30
Pretorius v Stock Owners Co-operative.......................................................................34
Pretorius’s Trustee v Van Blommenstein.....................................................................36
Learning Outcome....................................................................................................37
The preservation of the Estate pending the Trustee’s appointment..........................37
The election of the Trustee............................................................................................38
The duties and powers of the Trustee..........................................................................38
The position in regard to impeachable dispositions...................................................38
The duties of the Insolvent............................................................................................38
,Past Paper Questions..............................................................................................38
Dispositions made for no value:...................................................................................38
Intention to prefer one creditor above another in the making of a disposition.........40
Voidable Preferences.....................................................................................................40
Difference between collusion, undue preference and voidable preference?............41
Dispositions in terms of s34 (voidable sales of a business or asset of a business) 41
Topic 5: Collection of the Estate Assets.
5.1 The preservation of the estate pending the appointment of a trustee.
The aim here is to preserve the estate until a trustee has been appointed.
, Section 17: Notice of sequestration order.
o Immediately after a sequestration order is granted.
o The registrar is obliged to transmit one original copy of the order to:
The Master
Who will then publish it in the Gazette.
The sheriff of every district in which the insolvent resides or
owns property
Every registrar of deeds
Every office having charge of an official register of ships
Every sheriff who is holding any of the debtors property under
attachment
o This to ensure that all interested parties are informed of the
sequestration of the estate and to prevent any improper dealings with
the insolvents property.
Section 19: Service of order and attachment of property.
o Service of order
The registrar of the court granting an order of final sequestration
must cause a copy of the order to be served on:
the insolvent and the spouse of the insolvent
And file with the master the sheriff’s return of service.
On being served with the order:
The insolvent is obliged to hand over to the sheriff all
records relating to his affairs
And lodge with the master a statement of his affairs
The solvent spouse who is served with a sequestration
order must also lodge her statement of affairs with the
master.
o Attachment of property
The sheriff is required to attach and make an inventory of the
movable property of the estate
The sheriff need take great care when executing this duty
, He is to respond only to the master and not to engage
with any of the sequestrating creditors who may be
present.
Section 5(2): Appointment of the Curator Bonis.
o If a curator bonis was appointed after publication of a notice of intention
to surrender, he is to remain the curator bonis once the sequestration
order has been granted.
Only until the appointment of a provisional trustee or the ultimate
trustee.
o The assets of the estate DO NOT vest in the curator bonis, he merely
has custody and control of them.
o The curator bonis’ fee should be paid as a cost of sequestration from
the estate.
Section 18: An Interim Trustee may be appointed.
o Immediately after the sequestration order is granted, the master may
appoint a provisional trustee.
Only the master can make this appointment
He has an unfettered administrative discretion regarding who he
appoints.
o A provisional trustee must give security to the satisfaction of the master
for the proper performance of his duties.
5.2 The election of the trustee.
Section 54 of the Insolvency Act
o Election of the Trustee by the creditors
First meeting of the creditors
o Formation of the concursus creditorum.
Any creditor who has proven a claim.
o The trustee is appointed at the First Meeting of the creditors.
Must be to the benefit of all creditors
Majority of the vote in both number and value
o To be appointed the person must obtain:
A majority in value (value of the creditors claim)
And a majority in number
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