,OCTOBER/ NOVEMBER 2021
Question 1
1.1 Briefly explain what is meant by the concept of “concursus creditorum”. (5)
The term concursus creditorumrefers to a “coming together” of the creditors. This
concept underlines the rights of the group of creditors as opposed to the rights of
any individual creditor, and requires that the assets of the debtor or debtor be split
evenly amongst the creditors. This prevents a situation where one creditor
receives his or her full payment from the insolvent estate while other receive
nothing.
In winding-up proceedings, the commencement date of the winding-up and the
establishment of the concursus creditorum
, that is, the coming together of the
creditors play a vital role. The purpose of establishing a concursus is to ensure
that the company’s property is collected and distributed amongst its creditors in
the prescribed order of preference.1
1.2 Explain why the court in Ex Parte Arntzen (Nedbank Ltd as Intervening Creditor)
2013 (1) SA 49 (KZP) held that creditors are more vulnerable in voluntary
surrender applications than in compulsory sequestration which then gives rise to
the requirement of a higher level of disclosure. (10)
In the case of Ex Parte Arntzen (Nedbank Ltd
as Intervening Creditor) 2013 (1) SA
49 (KZP), the court found that the onus lies with the applicant to prove, on a
balance of probabilities that the sequestration will be to the advantage of creditors.
The test used in these instances is stricter than that used in compulsory
sequestration, therefore requiring a higher level of disclosure on the part of the
debtor. Govern J, outlined the reasons for the need of such a requirement.
Firstly, the applicant must make a full and frank disclosure in cases of voluntary
surrender applications. The reason for this is, mainly to satisfy the test laid down
1 Sharrock R, Van der Linde K and Smith A Hockly’s Insolvency law 9 th ed (Juta Cape Town 2012) 255.
2
, in section 6(1) of the Insolvency Act 24 of 1936. It is also because an application
for voluntary surrender is made on an ex partebasis, and such cases necessitate
utmost food faith.2
Furthermore the court found that although voluntary surrender applications are
brought on an ex partebasis, they do not entirely meet the requirements for true
ex parteapplications, as the applicant is not the only one who is interested in the
relief sought, the creditors also have an interest in the result of the application.
Therefore, necessitating full and frank disclosure.3
Creditors in these instances do not have the luxury of time and sometimes
resources to peruse the statements containing the debtor’s affairs or even to
follow up on notices of surrender, and as a result may decide it is not worth it to
intervene in the application. Voluntary surrender applications undoubtedly place
creditors in a vulnerable position. The courts might also not properly analyse an
unopposed application as they would if it were opposed, to find material
suppressed or not disclosed by the applicant.4
Another reason furnished by the court as to the need for a higher level of
disclosure in voluntary surrender applications, is to reduce the ubiquitous risk of
the debtor abusing the sequestration process, and only using sequestration as a
way for the debtor to evade liability and in no way benefit the creditor.5
1.3 Dumisani approaches you for advice. He informs you that his brother, Benson,
owes him R24 000 for gardening services rendered by his company. Dumisani
explains to you that despite various attempts to get Benson to pay his debts, he
has yet to make any payment. Dumisani is especially upset because he has heard
a rumor that Benson and his wife has apparently now relocated their home from
2 Ex Parte Arntzen (Nedbank Ltd as Intervening Creditor) 2013 (1) SA 49 (KZP) (hereinafter Ex Parte
Arntzen case) [5].
3 Ex Parte Arntzen case [6].
4 Ex Parte Arntzen case [8].
5 Ex Parte Arntzen case [11].
3
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