Sequestration & Liquidation

Is your company experiencing financial difficulties? We can advise you on the best course of action in dealing with creditors that are hounding you for payment.
Are you over indebted and cannot make payment of your monthly expenses with the income you are currently earning?
We suggest you consider either liquidating your company or sequestrating your personal estate.



The liquidation of a Company / Close Corporation is a legal process whereby the Company and its affairs are placed under the control of a liquidator who must realize the assets and divide the assets amongst creditors according to the stipulations in the Companies Act. The main aim of liquidation is to divide the yield from the sale of assets amongst creditors fairly and to dissolve the Company in an orderly manner.


Sequestration is a legal process by which an individual is declared insolvent by an Order in the High Court in terms whereof certain of your assets are handed over to a trustee, after which a Trustee (appointed by the Master of the High court) must according to the rules of the Insolvency Act, sell your assets. The proceeds of the sale of your assets are divided amongst creditors in a manner which is prescribed in the Insolvency Act.

Requirements for insolvency:

Your liabilities must exceed your assets.

In the instance that it is a sequestration of an individual or a trust, the sequestration must be to the advantage of your creditors. This is however not a requirement for a company or close corporation.

There must be sufficient assets to pay the costs of the sequestration of liquidation application

There are two forms of sequestrations / liquidations:

1) Voluntary Sequestration / Voluntary Liquidation

This is where an individual or the trustees of a trust applies to court for the sequestration for his own estate or in the directors or members of a company or close corporation applies for the liquidation of the company or close corporation.

Who brings the application in the following instances for a voluntary surrender?

  • Estate of natural person: the debtor or his agent.
  • Partnership: all the partners resident in South Africa or their agent.
  • Estate of a deceased debtor: the executor of the estate
  • Joint estate of spouse married in community of property: both spouses.
  • Estate of person unable to manage in community of property: both spouses.
  • Estate of person unable to manage his own affairs: curator bonis.

2) Compulsory Sequestration / Liquidation

This is where a creditor applies to court for the sequestration of his debtor's estate or for the liquidation of a company or close corporations.


The rehabilitation of an insolvent puts an end to the sequestration and relieves the insolvent of every disability resulting from the sequestration. It also discharges all the debts of the insolvent, which were due, or the cause of which had arisen, before the sequestration.

Subject to complying with certain requirements, an insolvent can be rehabilitated. Rehabilitation however occurs automatically upon the expiry of ten years from the date of sequestration.

In other instances an application to the High Court is needed. There are various factors that the court would consider before granting a rehabilitation order. Generally this can happen four years after the date upon which the insolvent's estate was sequestrated. In certain circumstances this can happen sooner.

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