Insolvency

Question 1

Advise your client on the advisability of proving a claim against the estate of the company in liquidation. Deal with the possibility that there will not be sufficient funds to pay costs of the liquidation and the liquidators costs

Answer 1

• advise client to be careful before proving claim
• if there is insufficient assets to cover the costs of liquidation and liquidators costs he will be called upon to make a contribution to cover these costs
• the amount of contribution will be in the same proportion as his claim stands to the other proven concurrent claims in relation to the short fall

Question 2

If your client decides to prove a claim what documents does he need to complete to do this

Answer 2

• Resolution by the client
• Affidavit in proof of the claim in statutory form
• statement of account showing how claim is made up and which must reflect all debits and credits with the applicable dates
• power of attorney authorising the creditors agent to appear before the master of the HC at a meeting of creditors to prove his claim

Question 3

Write a letter to your client explaining the procedure that will follow from completing the claim forms to the point when your client receives a divided

Answer 3

“we confirm that the claim forms have now been submitted to the liquidator who will see to it that the claim will be proved at the next meeting of creditors.

After the second meeting of creditors, provided no special meetings are held, the liquidator has to draw his account and submit the same to the Master of the HC who will inspect the same, prepare a list of queries or approve the account and allow the liquidator to advertise the fact that the account will be confirmed.

Thereafter the liquidator will make a distribution in terms of the account and will pay dividends to the proved creditors insofar as they have not been paid earlier”

Question 4

Write a letter to your client Mrs Smith who is married out of community of property to her husband. Her husbands estate has just been sequestrated and she fears that this might have an influence on her assets. Advise her of the potential risks and what she can do to protect her interests and enforce her rights

Answer 4

• I would like to inform you that as a result of the insolvency of your husband there are legal consequences in regard to your estate that ensues
• S24 of the Insolvency Act provides that where the spouse of the insolvent person is in possession of any property such property may be claimed by the insolvent trustee and in this event the property is deemed to be the property of the insolvent and could therefore form an asset in his insolvent estate.
• if husband is in possession of any of your assets you would have to take steps to recover those assets. you would have to lodge a claim normally by way of affidavit with the trustee for the release of your property. you will have to furnish the trustee with proof establishing your ownership.
• if trustee refuses to release the goods it will be necessary to obtain a court order to compel him to do so.