STUDY UNIT 11: REHABILITATION

Question 1

Rehabilitation enables…

Answer 1

rehabilitation enables an insolvent to make a new beginning and discharges his from his pre-sequestration debts and restrictions placed by sequestration.

Question 2

SECTION THAT PROVIDES FOR REHABILITATION:

Answer 2

section 124 provides for the application for rehabilitation.

Question 3

AUTOMATIC REHABILITATION AFTER 10-YEARS: SECTION 127A:

Answer 3

-an insolvent not rehabilitated by the court within the period of 10-years from the date of sequestration is deemed to be rehabilitated.
-on application by an interested party, the court can order rehabilitation, otherwise, before the expiry of the 10-year period.

Question 4

REHABILITATION WITHIN THE 10-YEAR PERIOD:

Answer 4

-the court has complete discretion as the insolvent has no right to be rehabilitated, in consideration of his negligent behaviour.

Question 5

CIRCUMSTANCES IN WHICH REHABILITATION MAY BE SOUGHT:

Answer 5

1. Composition of not less than 50 cents in rand {s124(1)}
2. Lapse of the prescribed period after confirmation of first account {s124(2)}
3. No claims proved after 6 months {s124(3)}
4. Full payment of all proved claims {s124(5)}

Question 6

1. COMPOSITION OF NOT LESS THAN 50 CENTS IN RAND- s124(1):

Answer 6

an insolvent may immediately seek an order of rehabilitation if:
1. a certificate from the Master has been obtained indicating that
2. creditors accepted the offer of composition, and
3. payment was made, or security for payment was given of not less than 50 cents in rand for every concurrent claim proved.

Question 7

2. LAPSE OF THE PRESCRIBED PERIOD AFTER CONFIRMATION OF THE FIRST ACCOUNT- s124(2):

Answer 7

an insolvent may apply for his rehabilitation after 12 months have elapsed from a confirmation by the Master of the first account in the estate, unless the estate has been:
1. sequestrated before, the period which must lapse before he can apply is 3 years from the date of confirmation of the first account.
2. convicted of a fraudulent act in relation to insolvency, the period which must lapse is 5 years from the date of conviction.

Question 8

3. NO CLAIMS PROVED AFTER 6 MONTHS- s124(3):

Answer 8

an insolvent may apply for his rehabilitation after a period of 6 months has elapsed from the date of sequestration if:
1. at the time of the application no claim has been proved against his estate.
2. not convicted of any fraudulent act in relation to his insolvency or any offences under s132, s133 or s134 of the Act
3, has never been sequestrated before.

Question 9

4. FULL PAYMENT OF ALL CLAIMS PROVED-s124(5):

Answer 9

the insolvent can apply at any time after the confirmation by the Master of the plan of distribution of full payments with interest to the creditors and all costs of sequestration.

Question 10

COURT’S DISCRETION:

Answer 10

the court may:
-postpone rehabilitation
2. grant rehabilitation subject to conditions
3. refuse rehabilitation
4. make considerations in favour of unconditional rehabilitation

Question 11

EFFECTS OF REHABILITATION

Answer 11

-Puts an end to sequestration
-Relieves the insolvent from every disability resulting from the sequestration
-Discharges all debts which were due, or which arose before sequestration.

Question 12

REQUIREMENTS O A DECLATORY ORDER:

Answer 12

1. publish a notice of his intention to apply in the Government Gazette
2. serve a copy of the notice to the Master, the trustee and all the creditors
3. show that the trustee and the creditors have full knowledge of the facts, and he must give full information to establish that the property was acquired adversely to the trustee.