The Law of Insolvency in South Africa is regulated by the provisions of the Insolvency Act 24 of 1936, with foundations in our common law, which has been influenced by different legal systems from Western Europe. But currently there is also other legislation affecting the insolvent debtor and the property in the insolvent estate. The courts too have had to formulate rules to govern aspects of insolvency law in South Africa. These variables created problem areas in insolvency law and in respect of the of the policies upon which the insolvency system hinges. The predominant policy in South African insolvency is the collection of the maximum assets of the debtor for the advantage of creditors in insolvent estates. This strict creditor orientated approach created further problem areas in respect of assets in the insolvent estates of individual debtors. If advantage to creditors cannot be shown in an application for the sequestration of a debtor’s estate, a court will refuse to grant that order. This strict policy overshadows policy concerns in respect of assets in insolvent estates, and regarding exemption law in respect of those assets. This has resulted in insolvency law reformers in South Africa missing the bigger picture, namely, that South Africa is a creditor driven developing society. It is conceivable that in the transformed South Africa, and in the present world economic chaos, there will be an escalation of sequestrations of the estates of individual debtors. Bearing this in mind, a reformed insolvency law system must become more debtor friendly. A change in the philosophy is needed in favour of an exemption policy for insolvent estates. Exemption policy must be based on the interest of the debtor and his dependants, his dignity, creditor and third party interests, social welfare, and human rights imperatives within the South African constitutional framework. Exemption policy must be linked to the policy of a “fresh start” for the debtor. The different policies in insolvency however create a conflict of interest among the different stakeholders, particularly regarding the assets in insolvent estates, thereby creating problem areas. In this thesis several problem areas are identified and critically analysed. The position of property included in, and excluded from, individuals’ insolvent estates is investigated from a brief historical perspective, and in a brief comparative survey of the insolvency systems of the United Kingdom and the United States of America. Acute problem areas are critically analysed in detail, and the constitutional impact on property in insolvent estates is considered in a separate chapter. The South African Law Reform Commission’s review of South African insolvency law is critically analysed in a chapter of this thesis, concluding that the Commission’s review is inadequate. This thesis concludes that there is a need to reform the insolvency system in South Africa and proposes a way forward in respect of property included in, and property excluded or exempt from insolvent estates. This thesis states the law to the end of October 2008. / Thesis (LLD)--University of Pretoria, 2009. / Mercantile Law / unrestricted

In South African insolvency law, in as much as debt relief measures are contained in three pieces of legislation, a discharge from debt is only available to an insolvent debtor whose estate has been sequestrated and he is eventually rehabilitated. The history of South African insolvency law indicates a developmental change from a ‘harsh creditor-orientated’ approach to a ‘debtor-friendly’ approach. However, the advantage for creditors’ requirement is now firmly embedded in the Insolvency Act 24 of 1936. This requirement is not defined in the Insolvency Act but has been largely interpreted by the courts and stringently applied. It is only once the applicant for the sequestration order has extinguished the burden of proving this requirement, amongst others, will the court exercise its judicial discretion to grant or refuse the order. Consequently, this requirement creates a stumbling block for debtors wishing to use the sequestration process as a debt relief measure and force discharge of their debts on their creditors. The sequestration process is aimed at the advantage of creditors and not the relief of debtors. Overburdened debtors seeking debt relief who cannot prove advantage of creditors are therefore not considered in sequestration applications. However, although debt relief is not a primary object of the Insolvency Act, it is an indirect consequence of the sequestration process when the insolvent debtor is rehabilitated. The Insolvency Act almost deals with every aspect of the different classes of creditors while there is no provision of the different classes of debtors who can and those who cannot prove an advantage to creditors. This serves as an indication that there is an imbalance between creditors’ and debtors’ interests. The study seeks to analyse the effect of the advantage requirement on sequestration applications from a debtor’s perspective. The alternative debt relief measures available to debtors when pursued by their creditors as contained in the Magistrates` Court Act 32 of 1944 and the National Credit Act 34 of 2005 are examined. It is submitted that South Africa does not provide the required sufficient debt relief because the administration orders and debt review in addition to other deficiencies, do not provide debtors with a statutory discharge from debts. The South African Law Reform Commission in the 2000 Insolvency Bill has recommended that the advantage for creditors’ requirement be retained in the new Insolvency Act. In a comparative survey, various legal systems are considered to investigate how the issue of finding a balance between debtors’ and creditors’ interests in insolvency law is dealt with. To accommodate all debtors, it is then submitted that the advantage requirement should not be retained in the Insolvency Act. / Dissertation (LLM)--University of Pretoria, 2012. / Mercantile Law / unrestricted

The issue addressed in this study is whether the South African insolvency law provides adequate debt relief measures to deal with the growing problem of overindebtedness amongst individuals. Against the background of a historical and comparative investigation this study focuses on a critical evaluation of debt relief measures provided for by the Insolvency Act 24 of 1936 as well as the alternative measures outside the ambit of the Insolvency Act. Although it is not a prime object of the Insolvency Act to afford the individual debtor a discharge of pre-sequestration debts it is a consequence of sequestration after rehabilitation of the debtor. Nevertheless, sequestration followed by rehabilitation is not readily available as a debt relief measure. This can mainly be attributed to the advantage for creditors requirement that can be viewed as an impediment to obtaining a fresh start for many individual debtors. This is also the debtor's position regarding debt relief provided by the procedure of composition in terms of the Insolvency Act, as it is currently only available after sequestration As far as creditors' interests are concerned, the efficiency of this requirement may also be questioned as statistics indicate that the sequestration process is implemented in instances where doing so is not cost-effective. It is furthermore submitted that the current alternative debt relief measures provided for by South African law are inadequate and that the problems encountered in practice regarding friendly sequestrations can to a great extent be attributed to this fact. In order to reserve sequestration for extreme cases, insolvency law reform aimed at preventing implementation of the sequestration process when doing so is not cost-effective is recommended. However, it is emphasised that these recommendations should only be implemented if provision is made for an adequate alternative debt relief measure that would accommodate debtors whose estates do not justify a concursus creditorum. It is submitted that the administration procedure in terms of section 74 of the Magistrates' Courts Act 32 of 1944 should be adjusted to offer the required debt relief by inter alia affording the debtor a discharge of his debts. It is furthermore submitted that this procedure should be combined with the pre-liquidation composition proposed by the South African law commission and that the combined procedure should only be open for implementation if an informal arrangement, coupled with debt counselling, cannot be reached. As regards international guidelines for insolvency law reform it is contended that South Africa should follow the example of other systems by fully embracing the fresh start approach. With regard to rehabilitation in terms of the Insolvency Act it is submitted that the automatic rehabilitation of bona fide debtors after three years should be the point of departure. Regarding assets excluded from the insolvent estate recommendations aimed at enabling the debtor to continue his household as a social and economic unit are made. In the end, South African insolvency law reform should seek to find a balance between debtors' and creditors' interests. It is submitted that the current proposals for insolvency law reform will not achieve this objective. / Dissertation (LLD)--University of Pretoria, 2004. / Procedural Law / unrestricted