Rehabilitation after Sequestration

25 Oct

The rehabilitation of an insolvent shall have the effect of putting an end to the sequestration and of discharging all debts of the insolvent, which were due before the sequestration. In addition the rehabilitation will relieve the insolvent of every disability that resulted from the sequestration.

A court may grant a rehabilitation order on application by the insolvent within a comparatively short time of the sequestration, where the claims have been paid in full or where an offer of composition has been accepted by the creditors and payment has been made of at least 50 cents in the rand on all claims. 

Otherwise, periods varying from twelve months to five years must have elapsed. These periods vary according to whether or not claims have been proved, whether or not the insolvent's estate has been sequestrated previously, and whether or not the insolvent has been convicted of any fraudulent act of insolvency.

A rehabilitation does not, however, affect:

  • the rights of the trustee or of 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;
  • the liability of a surety for the insolvent; or
  • the liability of any person to pay any penalty or suffer any punishment imposed under the Act.

Where an insolvent has not been rehabilitated by order of court within ten years from the date of sequestration, the insolvent is deemed to be rehabilitated automatically after that period unless a court orders otherwise before the expiry of the period of ten years.

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