 Insolvency means you use your assets to get rid of creditors
Our Holistic Approach to The Law, Your life and Your Business
Insolvency means you use your assets to get rid of creditors
FAMOUS PEOPLE WHO WERE SEQUESTRATED:
Donald Trump (twice); Walt Disney (before he started Disney Pictures); Abraham Lincoln (16th American President – it then took him 30 years to achieve his goal to become President);Milton Hershey (was sequestrated 4 times – on the fifth go he started Hershey’s chocolates – today a huge international company); Meat Loaf (singer – before “Bat out of Hell” album which still sells about 200 000 albums per year); William C. Durant founded General Motors, Chevroletand Durant Motors. Durant Motors was established in 1921 but unfortunately failed in 1933 after the Great Depression. General Motors is the biggest car manufacturer in the world today; Willie Nelson(country and western singer); Thomas Jefferson(American president); Kim Bassenger (actress); David Crosby(Crosby, Stills and Nash band); Heidi Fleiss(the famous “madam”); Zsa Zsa Gabor(actress); Ulysess S Grant (18thAmerican President) ; Archie Griffin(football player) ;M C Hammer(singer) ; Isaac Hayes (the voice of “Chef” on South Park); La Toya Jackson (Michael Jackson’s sister – singer and actress);Don Johnson(actor); Larry King (famous talk-show host) ; William McKinley (25th President of the USA)
“Sequestration is for people who desire success but won’t be deterred; using every available mechanism to reach their goal. Sequestration is the mechanism one uses as leverage to get out of a situation which may immobilise the ability to be successful.”
Apart from paying your debt in full, insolvency is the only legal method to completely get rid of creditors.
Insolvency is the umbrella term for liquidation and sequestration. Individuals sequestrate and businesses liquidate, but both terms mean insolvency. One is insolvent when one's liabilities exceed one's assets. In terms of the Close Corporation Act, the Trust Act and the Companies Act a business must liquidate when its liabilities exceeds its assets. Individuals should ideally own property to be able to sequestrate and if the individual does not own property, he/she must be able to pay cash into Court to the value of 20c in the Rand of the total debt. With property, no cash is required to be paid into court.
The reason for this is that the basis of a sequestration application in South Africa, is that there must be a benefit to creditors. The benefit lies in the fact that the property can be sold and the monies divided amongst creditors. If there is not a property to sell, there must be cash that can be divided amongst creditors, otherwise the requirement of benefit to creditors cannot be fulfilled and the application for sequestration cannot be brought to Court.
With a business the requirement for an asset or cash is not required, because it is illegal for a business to trade if its liabilities exceed its assets (in terms of the aforementioned Acts). It is therefore irrelevant whether the business has assets or cash or not, the application can be brought without that requirement.
With liquidation and sequestration timing is everything. One must liquidate the business before one sequestrates and if one decides to only sequestrate, one should ideally sequestrate before the suretyships of the business (if one has signed any) are called up. We do not always liquidate a business if we can sequestrate you, to save you money and it is not always necessary to liquidate a business. We will discuss this with you during our consultation.
The worst thing that can happen, is if the bank reposesses your property. This will mean that the bank will sell the house at an execution sale and you will remain liable for the balance. Judgment, which the bank would have taken against you if you don't pay the debt, stands for THIRTY YEARS or until the debt is settled in full. PLUS you have to pay all the other creditors. This will mean that you will not easily recover financially and you can never build up assets again for fear of creditors attaching these assets and sell them in a sale of execution. Your money will not work for you so that you can create wealth, which basically takes you out of the economy. You will contantly be busy managing your debt and creditors, without enjoying the freedom of using your money to create wealth and a new life.
With sequestration one uses one's property as leverage to get rid of ALL creditors. Paradoxally, sequestration is the method we use to keep you on your feet. Some people think that you loose everything and are down and out facing money problems for the rest of your life. This is not true. Sequestration allows you to carry on with your business and your life, free from creditors. Sequestration stands for four years PLUS you don't have to pay any of the debt. After four years you rehabilitate, your records are cleared and you are back to normal.
Insolvency is the leverage that you use to get out of a situation that would otherwise make it impossible for you to become debt free.
During your free consultation (whether by phone, email or in person), we will tell you everything we know so that you can make an informed decision. If you decide not to go ahead, that is fine, but at least you can then make a better decision than you would have if you did not have the knowledge. We gladly pay forward our knowledge.
Our aim is to assist you through a difficult period, so that you are not only able to carry on with your life with the least inconvenience, but we also look at your future and will give you the best advice to leave you protected during your new life and in the future. We want you to be successful without the burden of debt. We specialise in people with too much debt, so we understand the psychological effect of debt. The fear, the worry, the feeling of failure, the shame, the guilt. These emotions are universal when it comes to not being able to pay one's debt. These feelings are unncessary, because there are solutions to debt, of which sequestration is but one. If you read on, you will understand the sequestration and liquidation processes better and hopefully it will open a door for you which you were not aware of.
WHAT IS INSOLVENCY?
The better known word for insolvency is “Bankruptcy”, although it is not technically correct. When your liabilites exceed your assets, you can apply to Court to be declared insolvent. There are three types of sequestration: agressive or friendly sequestration, or voluntary surrender. In the case of agressive sequestration, a creditor brings an application for sequestration against you, for example the bank (an agressive creditor). In the case of friendly sequestration, a creditor whom you are on a friendly foot with brings the application and with voluntary surrender, you approach the court yourself, If you cannot pay your debt, because it is too much, or if your income has dropped and you cannot service your debt or manage your creditors, or experience money problems, that is a good time to consider to apply for insolvency. If your business is failing or if you do not turn over enough money any longer to sustain the business, it is good time to liquidate the business. It is no use trying to revive a corpse and the sooner one is able to make a clinical instead of an emotional decision, the sooner one can recover.
|
THE PROCESS OF SEQUESTRATION:
|
|
A PROVISIONAL APPLICATION – a provisional order is granted
|
|
B The matter is postponed for one month (return date) to allow creditors to oppose the application
|
|
C On the return date, the Provisional Order is made final, the person is now sequestrated
|
|
D Trustee/Curator appointed by the Master of the Supreme Court (The Curator is tasked with selling the assets, paying the creditors and reporting to the Master
|
|
E Creditors paid. Balances not recovered WRITTEN OFF.
|
|
F NO MORE DEBT TO PAY
|
SEQUESTRATION ADVANTAGES:
|
R As soon as the provisional order is granted, all legal
actions and collections are suspended,bringing great
relief from phone calls and letters;
R The moment a person decides to sequestrate, she/he
stops paying all debt. to pay any further debt at this
stage would be throwing good money after
bad (immediately cash flow improves);
R As soon as the final order is granted a person is
sequestrated and is free from debt;
R A person can rehabilitate after four years and life
then gets back to normal, debt free.
R This enables him/her to start a new life to get back
on his/her feet without the burden of having to pay
off debt;
R You can stay in the property until the property is
sold, anything from 4 – 6 months without paying any
debt;
R The person can make an offer to the curator to
purchase back his/her furniture (if it is fully paid)
and arrange to pay it off;
R As long as you control your assets, you can use
it to your benefit to get rid of ALL creditors.
R If you loose control to a creditor, the creditor sells
the assets to ITS OWN benefit only and all other debt
remain due. Sequestration avoids this problem.
|
|
|
As soon as a person has decided to sequestrate, he/she stops paying all debt which will enable him/her to contribute to the costs.
By law we cannot be a creditor of the debtor when we lodge the application, therefore the full fee must unfortunately be paid upfront.
TWhere persons are married in community of property, one application is brought
TWhere persons are married out of community of property, and both persons are applying for sequestration, it would be two separate applications. However, we shall give a separate quote for instances such as these.
LIQUIDATION
(Close Corporation, Trust, Company Act(entity))
|
A No assets are required for an entity to liquidate,
because:
B The Close Corporation Act, The Trust Act and the
Companies Act determine that an entity is not allowed to
trade if its liabilities exceeds its assets
C Therefore it is easy to liquidate an entity, there are less
formalities than for sequestration
D If a person has signed surety for the entity, he/she will
have to liquidate and sequestrate, as he/she would also
be personally liable for the debt of the entity under the
suretyships. (We don't always liquidate - we need
to discuss this with you first)
|
WE WORK NATIONALLY.
You will find after a consultation with us that you feel empowered to make wise decisions, to negotiate better and to loose the fear and worry. Debt is nothing to be ashamed about. The New Credit Act, the recession and various other external matters have caused a financial slow-down for the South African economy. Do not take it personally. Rather admire yourself that you had the courage to take the risk, then empower yourself with the necessary knowledge so that you can put yourself in a better position and do better business in the future. We gladly assist you.
|
