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How to
apply for Rehabilitation |
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The
effect of Rehabilitation |
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When
will I be able to rehabilitate |
| How much
does a rehabilitation cost? |
| The
insolvency of a party comes to an end when
he is rehabilitated. The insolvent is
automatically rehabilitated within 10 years
from the date of his sequestration. The
insolvent may apply to Court within 10 years
of his sequestration. He may apply
immediately if there has been a composition
of not less than 50c in the rand. In all
other instances he may apply for
rehabilitation of his estate: |
1. If he
has been sequestrated before, a period which
must elapse
before he can apply for rehabilitation is 3
years from the date of
confirmation of the first account. |
2. If he
has been convicted of fraud 5 years have
elapsed from the date
of his conviction. |
3. The
insolvent may obtain an order of
rehabilitation within 4 years
provided that the master has recommended
that he be rehabilitated. |
4. If no
claims are proved the insolvent may apply
for rehabilitation after
6 months provided he has not been convicted
of any fraudulent act in
relation to his insolvency and his estate
has not been sequestrated
before. |
5. Payment
of all proved claims If the insolvent pays
all proved claims
with interest after the confirmation by the
Master of the plan of
distribution he may apply for
rehabilitation. |
| How to apply
for Rehabilitation |
The insolvent
must give 6 weeks’ notice of his intention
to apply by advertisement in the government
Gazette and by written notice to the master
and his trustee. He must also provide
security to the amount of R500.00 (five
hundred Rand) for the payment of the costs
of any opposition which the insolvent may be
ordered to pay. A substantive application is
then launched to the High Court of South
Africa which is complicated and we do not
intend to deal with the procedure and
content of the application in this website.
For further information please contact us. |
| The Effects Of
Rehabilitation |
Subject to the
provisions of Subsection (3) and subject to
such conditions as the Court may have
imposed in granting a rehabilitation, the
rehabilitation of an insolvent shall have
the effect –
of putting an end to the sequestration; of
discharging all debts of the insolvent,
which were due, or the cause of which had
arisen, before the sequestration, and which
did not arise out of any fraud on his part;
of relieving the insolvent of every
disability resulting from the sequestration.
A
rehabilitation granted on an application
made in circumstances described in
Subsection (3) of Section 124 shall have the
effect of reinvesting the insolvent with his
estate. |
| A
rehabilitation shall not effect: |
the rights of
the trustee or creditors under a
composition;
the powers or
duties of the Master or the duties of the
trustee in connection with a composition;
the right of the trustee or creditors to any
part of the insolvent’s estate which is
vested in but has not yet been distributed
by the trustee, but subject to the
provisions of Subsection (2); the liability
of a surety for the insolvent; the liability
of any person to pay any penalty or suffer
any punishment under any provision of this
Act.
Note: the rehabilitation of an
insolvent does not automatically re-invest
him with his estate, save in one instance
(Section 129(2) read with Section 124(3) –
where an insolvent is rehabilitated under
Section 124(3), ie. where no claims have
been proved against his insolvent estate,
the effect of his rehabilitation is to
automatically re-invest him with his
estate).
Thus property
(excluding surplus money) of the insolvent
estate vesting in the trustee and unrealised
at the date of rehabilitation remains vested
in the trustee for purposes of realisation
and distribution. If, however, circumstances
warrant, the Court in the exercise of its
discretion under Section 127(2) may make an
order for the reinvestment of such property
in the insolvent. The insolvent has to make
application for an order reinvesting his
property in him. Surplus monies available
for confirmation of the liquidating and
distribution account is paid into the
Guardian’s Fund and after rehabilitation it
is paid to the Insolvent at his request.
After twelve months have elapsed after
confirmation by the Master of the first
trustee’s account in the estate (provided
the insolvent does not fall within the
provisions of Section 124(2)(b) or |
| FAQs - Rehabilitation of an
Insolvent Estate |
| Currently, Sebenza Business Solutions charge a fee of R7500
and disbursements, per rehabilitation application.
A deposit of at least R 1500 is required before any legal
work is done. The balance will be payable in 2 monthly
installments of
It is therefore important to fist establish whether in fact
you qualify to apply for rehabilitation and we therefore
suggest you look at the following question for the
rehabilitation timetables: |
| When will I be able to rehabilitate? |
| FAQs - Rehabilitation of an Insolvent Estate |
If your estate is sequestrated you may, subject to certain
conditions, apply for your rehabilitation. If your
application is successful (if you are rehabilitated), the
court will declare that you are no longer an insolvent and
that you are once more free to trade and contract.
The Rehabilitation of an Insolvent is regulated by Sections
124 and 127A of the Insolvency Act. Section 124 deals with
rehabilitation application prior to the expiry of 10 years
from date of sequestration and Section 127A deals with the
automatic rehabilitation of an Insolvent after the expiry of
10 years since the date of Sequestration.
In order to assist clients in determining exactly when they
will be entitled to apply for the rehabilitation of their
insolvent estate, we have drafted a time table according to
our interpretation of Sections 124 and 127A of the
Insolvency Act.
At any time after Master issues a certificate in terms of
Section 119(7)
Section 124(1) of the Insolvency Act states that an
insolvent may apply for rehabilitation of his or her estate
at any time after the Master issued a certificate in terms
of Section 119(7) of the Insolvency Act. The certificate
serves as confirmation that at least three-fourths (¾) of
creditors who proved claims against the insolvent estate,
have accepted a composition for payment of: |
| A dividend of
at least 50c in the Rand for all concurrent
creditors who proved claims against the
insolvent estate; and
If such
dividends have not been paid, confirms that
security for the payment thereof has been
given. At any time Section 124(5) of the
Insolvency Act states that an insolvent may
apply for rehabilitation of his or her
estate at any time after the Master
confirmed a distribution plan providing for
payment of: |
| 1. All claims proved against the insolvent estate, in full;
and |
| 2. Interest thereon calculated from the date of
sequestration in terms of Section 103(2) ; and |
| 3. All the costs of sequestration. |
| 6 Months after date of sequestration
Section 124(3) of the Insolvency Act states that an
insolvent who was sequestrated for the first time may apply
for rehabilitation of his or her estate after 6 months have
lapsed from the date of sequestration of their estate,
provided that: |
| At the time of
making the application, no claim has been
proved against the insolvent estate; and |
| They have not
been convicted of any offences that would
result in the application of Section
124(2)(c) of the Insolvency Act. |
| 12 Months after Master confirmed the First Liquidation and
Distribution Account |
| Section 124(2)(a) of the Insolvency Act states that an
insolvent who was sequestrated for the first time may apply
for rehabilitation of his or her estate after 12 months have
lapsed from the date of confirmation by the Master of the
trustee’s first liquidation and distribution account,
provided that: |
| They have not
been convicted of any offences that would
result in the application of Section
124(2)(c) of the Insolvency Act; and |
| At least four
years have expired from the date of
sequestration, except upon the
recommendation of the Master. |
| 3 Years after Master confirmed the First Liquidation and
Distribution Account, if previously sequestrated |
| Section 124(2)(b) of the Insolvency Act states that if an
insolvent has been sequestrated previously, he or she may
only apply for rehabilitation of their estate after three
years have elapsed from the date of confirmation by the
Master of the trustee’s first liquidation and distribution
account, provided that: |
| They have not
been convicted of any offences that would
result in the application of Section
124(2)(c) of the Insolvency Act; and |
| At least four
years have expired from the date of
sequestration, except upon the
recommendation of the Master. |
| 5 Years after conviction of fraudulent act in relation to
insolvency |
| Section 124(2)(c) of the Insolvency Act applies to any
insolvent that was convicted of any fraudulent act in
relation to his or her existing or any previous insolvency,
or of any offence under Sections 132, 133 or 134 of the Act.
Such an insolvent may only apply for rehabilitation after
five years have elapsed from the date of conviction. |
| 10 Years after date of sequestration - Automatically
rehabilitated |
| Section 127A(1) of the Insolvency Act stipulates that any
insolvent not rehabilitated by court application within 10
years from the date of their sequestration is deemed to be
rehabilitated, unless a court orders otherwise upon the
application of an interested person. Such an application
must be made within the 10-year period.
The rehabilitation in terms of Section 127A(1) is automatic;
there are no court procedures, applications or formalities. |
| Will I have to pay any of my debt once I rehabilitated? |
| FAQs - Rehabilitation of an Insolvent Estate |
| No. All debt incurred prior to your sequestration will be
payable by you insolvent estate. Whatever portion of the
debt that remains unpaid, will be written off as
unrecoverable and will therefore not be payable by your
rehabilitated estate. |
