n Tydskrif vir die Suid-Afrikaanse Reg - Some consequences of the National Credit Act 34 of 2005 on the proof of claims in insolvency law : notes

Volume 2010, Issue 4
  • ISSN : 0257-7747
  • E-ISSN: 1996-2207



As a general rule any creditor who wishes to share in the distribution of the proceeds of the assets in an insolvent estate must prove a claim against the estate at a meeting of creditors ("creditors" in this context refers to creditors in respect of debts incurred prior to sequestration - 1973 2 SA 232 (N)). South African insolvency law proceeds from the premise that once a sequestration order is granted, a comes into being and the interests of the creditors as a group enjoy preference over the interests of individual creditors ( 1911 AD 141 166, where the court explained the key concept of 1946 OPD 209 223; Sharrock (2006) 5). The is regarded as one of the key concepts of the South African law of insolvency, and the object of the Insolvency Act 24 of 1936 is to ensure a due distribution of assets among the general body of creditors. As a rule, however, a creditor has no right to share in the distribution of the assets, vote on matters concerning the administration of the estate, or challenge any of the trustee's actions, unless he has successfully proven a claim against the estate. The proof of a claim gives the creditor the required and at the same time provides proof of the existence of a debt ( 1991 2 SA 345 (W); see also Nagel (ed) (2008) 3).

By means of a system of meetings the insolvent's creditors establish their claims, and in general all claims must be proved to the satisfaction of the presiding officer at such a meeting of creditors. (Section 44 of the Insolvency Act and section 366 of the Companies Act 61 of 1973 deal with the proof of claims; the new Companies Act 71 of 2008 will replace the Companies Act 61 of 1973 except for chapter 14 of the 1973 act, which deals with the winding-up and liquidation of insolvent companies, and which will remain in force until new insolvency legislation is enacted; see also Sharrock 100.) The purpose of this note is to consider the possible effect of certain provisions of the National Credit Act 34 of 2005 on the proof of claims in insolvency law following sequestration. The questions that will be addressed are whether the presiding officer at a meeting of creditors will have to consider the National Credit Act when adjudicating on the claims lodged for proof and to what extent the provisions of the National Credit Act dealing with reckless credit and unlawful credit agreements must be taken into consideration in this regard. Although the presiding officer follows the same procedure in the case of the sequestration of a natural person debtor in terms of section 2 of the Insolvency Act and in the case of a liquidated company that is unable to pay its debt, this note will largely be limited to the position regarding the first-mentioned type of debtors.

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