The dissertation considers the justification of the stringent natural person insolvency system in light of the “advantage to creditors” requirement. Jackson’s (The Logic and Limits of Bankruptcy Law (1986) 3) criteria of “what is being addressed” by the South African natural person insolvency law system, and why that which is being addressed, is a “proper concern” of the South African system, is used as to assess the system. It is established that the South African natural person insolvency law system is a system which favours the protection of the interest of creditors. The international trend towards more debtor-orientated insolvency law systems, has become the topic of academic discussion, with the South African insolvency law system harsh criticised for not developing in line with this trend. It can be safe to state that academics, in analysing the South African insolvency law system, have discovered a “problem” with the South African system and are approaching their insolvency analyses by viewing the South African system as conflicting with or overriding some social or economic goal due to the fact that it has not necessarily developed in line with the international systems. In terms of the criteria established by Jackson for insolvency analyses, it can be argued that this approach is fundamentally flawed. The analysis in this dissertation is not undertaken for the purpose of identifying discrepancies or differences between the South African system and other natural person insolvency law systems found in foreign jurisdictions, but rather for the purpose of analysing the South African system against criteria distinctive to the purpose of its creation. Accordingly, to proceed with this analysis, one has to applying Jackson’s criteria and identify “what is being addressed” and why that which is addressed is a “proper concern” of the natural person insolvency law in South Africa. Against this background, it is possible to analyse the stringent South African natural person insolvency law system in light of the “advantage to creditors” requirement in a sound manner. / Dissertation (LLM (Insolvency Law))--University of Pretoria, 2020. / Jurisprudence / LLM (Insolvency Law) / Unrestricted

Natural person insolvency in South Africa has primarily been governed by the Insolvency Act 24 of 1936, which is almost a century old. Despite a major jurisprudential shift that transpired in 1996, the Insolvency Act remains rigid to holistic transformation to align with the spirit of the Constitution of the Republic of South Africa, 1996 and international best practices regarding the treatment of the insolvency of natural persons. The South African insolvency system is still premised on the archaic policy of “advantage for creditors” as opposed to a fresh-start policy, the latter of which is widely commendable. International trends and guidelines promote the discharge of all pre-sequestration debts, with some exceptions. These exceptions, among others, include the exclusion of maintenance debt from the discharge to ensure that the human rights of maintenance creditors are maintained and sustained. International trends and guidelines advocate for a balanced approach, which seeks to balance the competing interest of both insolvent debtors and maintenance creditors. However, the South African approach, falls-short of the international best practices, because it does not exclude maintenance debt from the discharge. This approach is dangerous and problematic, because it potentially compromises certain human rights guaranteed in the Constitution. Furthermore, maintenance claims do not enjoy any preference when the insolvent debtor’s estate is being distributed. The maintenance creditors only have a concurrent claim against the insolvent estate. The implication of this, among others, is that maintenance creditors are burdened with liability for contribution, as envisaged in section 106(c) of the Insolvency Act, should there be insufficient funds in the free residue account to cover the costs of sequestration. International trends and guidelines are leaning towards affording maintenance creditors’ claims preference, with an aim to promote the public policy of family support and human rights. The study argues that the South African position on the ranking of maintenance creditors’ claims compromises the constitutional rights of maintenance creditors and this necessitate urgent legislative attention. The violation of constitutional rights of maintenance creditors through the legal position of the discharge of maintenance obligations, and the ranking of maintenance claims, does not comply with the proportionality test, that is applied when assessing whether a violation of a right guaranteed in the Bill of Rights is justifiable and reasonable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors. / Mini Dissertation (LLM (Banking Law))--University of Pretoria, 2020. / Mercantile Law / LLM (Banking Law) / Unrestricted