SU9 Flashcards
Meeting of creditors
By means of system of meetings where the creditors can:
1. establish their claims
2. elect a trustee
3. give directions to the trustee on the winding up of the estate
1st meeting
The Master convene the first meeting immediately on receipt of final sequestration order by notice in the Gazette not less than 10 days prior to meeting. Purpose: enable creditors of the estate to prove their claims against the estate.
2nd meeting
After first meeting and appointment of the trustee on a date fixed by Master, the trustee convenes the second meeting by notice in the Gazette and 1 or more newspapers.
Purpose: To enable creditors to prove claims, receive trustee’s report on affairs and condition of estate and to give trustee directions on administration of the estate.
Special meeting reasons
- Proof of claims
- Interrogation of the insolvent
Proof of claims elements
a. Necessity for proof of claims
b. Time for proof of claims
c. Procedure for proof of claims
Proof of claims elements: Necessity
Creditor (C) cannot share in any distribution of assets, challenge trustees’ actions etc. UNLESS he has proved his claim against the estate.
However, he may keep abreast the developments w/o proving a claim by paying R25 to register his name & address to the trustee- s43
PROOF OF CLAIM = locus standi & prima facie proof of the existing debt.
Proof of claims elements: Time
In general= anytime before final distribution of estate
However, a creditor can prove his claim by obtaining a leave from the Master and paying an X amount directed by the court.–s44(1)
Proof of claims elements: Time2
The court rejected a contention that the Master might not permit the creditor to prove a claim in terms s44(1) after expiry of the 3month period if the creditor did not have a good reason for the delay and if the creditor deliberately withheld proof of his claim out of fear that contribution would be payable by creditors
Proof of claims elements: Procedure
a. Documents which must be lodged
b. Time and place for lodging documents
c. Examination of claim documents
d. Attendance by creditor
e. Interrogation of creditor
Documents which must be lodged
A claim must be proved by an affidavit setting out the following:
1. Facts on which claim is based
2. The nature and particulars of claim
3. Whether the claim was acquired by way of cession after the institution of sequestration proceedings
4. The nature & particulars of any security held for the claim.
Special meeting: Proof of claims
Convened by the trustee when he/she is called upon by any interested party tendering payment of expenses to be incurred in connection with meeting, by notice on the Gazette.
Purpose: Proof claims against the estate.
Special meeting: Interrogation of the insolvent
At any time, provided Master gives consent, trustee may call a meeting and must do so if required by a creditor who has proved a claim against estate.
Special meeting: Interrogation of the insolvent case law Marques & another v De Villers 1990
T called a special meeting for further proof of claims, however, his sole purpose in the meeting was to interrogate the insolvent & other witnesses.
Court held that the meeting had not been properly convened and thus the interrogation could not continue
Special meeting: Interrogation of the insolvent case law Harken v Lane 1998
Issue: Unconstitutionality of s 65(1) in relation to the solvent spouse. The violation of the solvent spouse’s rights to equality and property, privacy and freedom and security of the person was in issue. The constitutional court held that on the basis that it is constitutional for the spouse’s property to temporarily vest in the trustee/master, it follows that the solvent spouse’s estate is relevant to the insolvent spouse and thus interrogation is permitted. No constitutional rights were violated.
Special meeting: Interrogation of the insolvent subjects
- All matters relating to insolvent/ his business affairs
- The sequestration of his estate
- Any property belonging to the estate
- Business, affairs or property of the solvent spouse
Interrogation procedure
- PO calls and administer oath
- Interrogation recorded as evidence in civil court s65(3)
- A declaration of a full and true disclosure of affairs
- Proceedings must be conducted i.a with the fundamental principles of justice & PO must perform his functions fairly and impartially
- PO stop any abuse
General meeting
At any time or when required to do so by Master or creditors representing ¼ of the value of all claims proved, the trustee may convene the general meeting by notice in the Gazette.
Purpose: Giving trustee instructions concerning administration of estate, also for considering an offer of composition
General meeting provisions
- Date and venue
- Record of proceedings
- Statement of privileged
General meeting provisions: Date & venue
M determines first meeting, trustee the rest. Every meeting must be held at a place which is accessible to the public, such as the M’s office
General meeting provisions: Record of proceedings
The presiding officer (PO) must keep a record of the proceedings at every meeting, certify it at conclusion and transmit it to the M. The minutes constitute prima facie proof.
General meeting provisions: Statement of privileged
The publication of any statement at a meeting is privileged to same extent as the publication of a statement made in a court of law.
TRUE OR FALSE: A creditor of the solvent spouse’s estate is only entitled to share in the proceeds of that spouse’s assets if the creditor has proved a claim against the insolvent estate in the usual way
True
Proof of the creditor of the solvent spouse’s estate claim entitles the creditor to the same rights and remedies, and places him under the same obligations, as a creditor of the insolvent estate, except that
- he is not entitled to share in the separate assets of the insolvent estate;
- he is not liable to make any contribution under s 106 (s 21(9))
- he is not entitled to vote at a meeting of creditors of the insolvent estate.
Complete the sentence: The creditors give directions to the trustee regarding the administration of the estate by means of____________________
Resolutions voted on and passed by them at meetings
Entitlement to vote
Every creditor who has proved a claim against the estate is entitled to vote at a meeting of creditors
Entitlement to vote exceptions
A creditor may:
1. not vote on the basis of a claim which he acquired by cession
2. vote up to the full value of his claim on the election of a trustee or any matter affecting his security, but his voting power is limited to the amount by which his claim exceeds the value which he placed upon his security when proving his claim in terms of s 83
3. not vote on whether steps should be taken to contest his claim or preference.
4. A creditor whose claim is conditional has no right to vote if the condition is one which will be fulfilled, if at all, within a year of the sequestration (s 48(a)).
