THE LIQUIDATION OF A COMPANY OR CLOSE CORPORATION

A1_BLiquidation is more commonly known as “bankruptcy” of a business. In layman’s terms this terminology refers to the fact that a business is in such a bad financial state that the creditors cannot be paid.

Liquidation refers to the bankruptcy of a company, close corporation or some other legal entity. In the legal process of liquidation the company is placed in the control of a liquidator. It is the duty of the liquidator to realize the company’s assets for the sole purpose to divide the proceeds fairly amongst the creditors. The liquidator must dissolve the legal entity in an orderly fashion.

According to the Insolvency and the Company Law Acts  the “members” of the legal entity may apply for the liquidation thereof. Such members include directors, creditors, shareholders, employees or even investors.

An liquidation application for a company may only be brought at the High Court. In the event of a close corporation the Magistrate’s Court does have the necessary jurisdiction to grant the final liquidation of such corporation. The liquidation order will normally be granted by the Court if the Applicant successfully made out a clear case that the company or close corporation is unable to pay its debts and that it is fair and equitable that the company/corporation be wound up.

What is the procedure that needs to be followed when applying for the liquidation of a company or close corporation? The attorney firstly has a consultation with the Applicant and during such consultation will the attorney advise whether liquidation is indeed the best option in the given circumstances. From the commencement of the process it approximately takes about between four to six weeks before the application is heard in court, unless the application is brought on an urgent basis. The Applicant does not appear in Court; only the legal representatives appear on the Applicant’s behalf. After the provisional order is granted and a return day for the final order is established, the Master of the High Court will appoint a liquidator. The liquidator will then take charge of the legal entity’s affairs. Once a liquidator is appointed the Applicant’s legal representative will set up a meeting with him/her during which the attorney negotiates on behalf of the Applicant with the appointed liquidator. After the provisional order is granted the attorney for the Applicant has to attend to certain legally prescribed formalities before the appearance in Court on the return day. The time frame between the first day of the application and the return day is more or less three weeks.

After the final order is granted the liquidator will realize the legal entity’s assets which fall in the insolvent estate. The liquidator distributes a dividend amongst the creditors.

Written by: Annerine du Plessis

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

MISBRUIK VAN DIE INSOLVENSIEWET

A1_BOp 4 Maart 2014 het Regter Binns-Ward in die Kaapse Hooggeregshof ‘n interdik teen ‘n maatskappy toegestaan wat bedrog gepleeg het in terme van die Insolvensiewet (hierna verwys as ‘die Wet’). Die maatskappy dit as volg gedoen:

Elke week soek die maatskappy se werknemers deur die ‘Groen Staatskoerant’ vir advertensies van verkope eksekusie van residensiële eiendomme. Die maatskappy het konsultante in diens regoor die land gehad. Die konsultante werf dan die besigheid van die betrokke eksukusie skuldenaars. Die skuldenaars word deur die konsultante ingelig dat ‘n kansellasie van die verkoop in eksekusie bereik kan word in terme van die Insolvensiewet. Die maatskappy bied aan om toe te sien tot die publikasie van ‘n kennisgewing van oorgawe ingevolge Artikel 4(1) van die Wet, onderhewig aan die betaling van ‘n fooi aan die maatskappy. Hulle lig die skuldenaar ook in dat daar geen gevolge sal wees indien ‘n aansoek by die hof nie volg nie. Dit wen vir die skuldenaar 30 dae. In dié 30 dae het die maatskappy, indien die skuldenaar wil en teen ‘n addisionele fooi, ‘n kans om ‘n forensiese oudit te doen wat met groot waarskynlikheid sal bewys dat die eksekusieskuldeiser (dikwels banke) sy eis misreken het en die skuldenaar het dan ‘n geleentheid om ‘n kompromie te bereik met die eksekusieskuldeiser.

Wanneer skuldenaars op hul betalings in verstek bly, stuur die banke ‘n opdrag na hul prokureurs toe om aksie teen die skuldenaars te neem. Die bank kan die regskostes terug eis van die skuldenaar, maar net in ‘n aparte rekening met ‘n verskillende rentekoers; hulle word nie toegelaat om dit by te voeg by die balans van die verband met ‘n ander rentekoers nie. Hulle kan net inskrywings met betrekking tot hul verbandpaaiemente by die rekening voeg, nie regskoste nie. Die maatskappy betwis dan dat die bank kontrakbreuk pleeg en doen by die hof aansoek vir die tersydestelling van die verstekvonnis.

Wat sê die Insolvensiewet?
Artikel 4(1) van die Wet vereis dat ‘n kennisgewing van oorgawe nie meer as dertig dae nie, maar minder as veertien dae voor aansoek gedoen word vir oorgawe van die boedel van die skuldenaar, gepubliseer word. Artikel 5(1) van die Wet bepaal dat dit onwettig is om enige eiendom van die skuldenaar waarop beslag gelê is in terme van ‘n lasbrief van eksekusie, te verkoop, indien hy reeds ‘n kennisgewing van boedel oorgawe in terme van Artikel 4(1) van die Wet gepubliseer het in die Staatskoerant (hierdie voorsiening is vir bona fide vrywillige oorgawe aansoeke, nie bedrieglike aansoeke nie), tensy die persoon belas met die lasbrief nie geweet het van die publikasie nie, en die eiendom gewaardeer is vir minder as R5000.

Die besluit om ‘n kennisgewing van oorgawe te publiseer deur ‘n skuldenaar vereis die voorneme van die skuldenaar om uiteindelik by die hof so ‘n aansoek in te dien en die nodige stappe te neem om sodanige sekwestrasiebevel te verkry. ‘n Mens kan ‘n kennisgewing van oorgawe onttrek (in terme van Artikel 7) deur skriftelike toestemming van die Meester van die Hof aan te vra. Alternatiewelik kan jy in terme van Artikel 6 die kennisgewing onttrek, deurdat dit verval indien geen aansoek vir oorgawe gemaak word na 14 dae na die datum in die kennisgewing van oorgawe nie. Hierdie bepaling moet egter tot voordeel van die skuldeisers wees, nie die skuldenaars nie. Artikel 6 maak dit duidelik dat geen wettige doel gedien kan word deur die publikasie van ‘n kennisgewing van oorgawe indien die betrokke boedel nie werklik insolvent is nie, en as dit nie bewys kan word nie, word die sekwestrasiekoste betaal en die sekwestrasie is tot voordeel van die Skuldeisers.

Hierdie saak het gegaan oor ‘n aansoek aan die hof, waar die applikant ‘n interdik versoek het teen die respondent in terme van die kennisgewings van oorgawe wat die maatskappy (onwettig) publiseer in terme van Artikel 4(1) van die Insolvensiewet. Die hof het ’n interdik toegestaan teen die maatskappy om hierdie soort besigheid onmiddellik te staak. Die hof het besluit dat dit onwettig en bedrieglik is en ‘n misbruik van die bepalings van die Insolvensiewet. Dit is duidelik, as mens die feite van die saak bestudeer, dat die skuldenaars nooit van voornemens was om voort te gaan met die oorgawe nie; dit is bloot gedoen met die doel om die verkope in eksekusie te frustreer. Publisering van ‘n kennisgewing van oorgawe is nie ‘n aanvaarbare metode vir die verkryging van tyd om forensiese oudits van die kliënte se rekeninge by die eksekusieskuldeiser te onderneem nie, of gronde om aansoek te doen vir die tersydestelling van die vonnis wat in die proses is om uitgevoer te word nie.

Ten slotte is dit belangrik om daarop te let dat die publisering van kennisgewings in terme van Artikel 4(1) van die Wet slegs mag plaasvind indien daar ‘n voorneme van sekwestrasie is.

Vir verdere inligting:
FirstRand Bank Limited (Applikant) v Consumer Guardian Services (Pty) Ltd & 9 Others (Saak no: 10978/2012)

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies.

DO YOU KNOW WHAT IS WRITTEN IN YOUR TITLE DEED?

A1_BBefore buying a property or submitting your building plans to the Town Council you should inspect the Title Deed, because failure to do so could become a costly exercise. The Title Deed will indicate all the registered servitudes and restrictive conditions applicable to the specific property.

A.     SERVITUDES

A few of these urban servitudes are discussed below:

  1. The right of the owner of the dominant stand to prohibit the erection of buildings on the servient property either at all, or beyond a certain height, or the right to an open view or the right to access of light, which restricts the servient property from impeding the view/light by buildings or trees.
  2. The servitude of support is the right to require one’s neighbour to support the weight of one’s house or wall or the right to drive a beam into one’s neighbour’s building. This could also be a reciprocal servitude and prevents either owner from demolishing his or her building and thus withdrawing the support which the other building receives from it. The owner of the servient stand is bound to keep the wall concerned in a good order at his own expense.
  3. The right to build on the servient property, for instance, to have a veranda encroach upon it or to have a balcony into its airspace.
  4. The right to receipt or non-receipt of dripping rainwater or water coming from a stream, or the right to have a rainwater drain discharging water onto the neighbour’s stand.
  5. Right of way is the right to walk across another person’s property or to drive a vehicle across it. 

The rights and duties of the owners of the dominant and servient properties

The rights and duties depend on the agreement constituting the servitude, which will be strictly interpreted in a manner which is least burdensome for the servient property. The owner of the dominant property must exercise his rights with due regards to the rights of the other party, which means that the servitude must be exercised in a proper and careful manner so as to cause the least inconvenience to the servient owner. This does not, however, restrict the owner of dominant property in the exercise of his or her rights merely because in doing so he or she will prejudice the owner of the servient property. Since a praedial servitude runs with the land any person who occupies the dominant property may exercise it. However, the owner of the dominant property is not permitted to assign his or her servitude for the benefit of another property than the dominant property.

The general rule is that a servitude cannot impose an active or positive duty on the owner of the servient property. There are only two exceptions to this rule, namely the servitude to compel the owner to construct a building of a certain height, and the servitude which imposes a duty to keep the wall in a good state of repair. 

Termination of these servitudes

  1. By agreement: A servitude may be terminated by agreement between the parties, which needs to be registered in the Deeds Office to bind subsequent purchasers.
  2. Abandonment: For example the failure to object to the erection of a fence or the closure of a road.
  3. Prescription: A positive servitude is lost if the holder fails to exercise his or her rights for an uninterrupted period of 30 years; however, this is not the case with a negative servitude.
  4. Destruction of either of the properties. 

B.     RESTRICTIVE CONDITIONS

These are statutory restrictions imposed on the owner of land in pursuance of specific township establishment legislation and registered against the Title Deeds of the stands for the reciprocal benefit of owners, and for the purpose of restraining the specific character of the neighbourhood.

A few Township conditions are mentioned here:

  1. The erf is subject to a servitude for sewerage or other purposes along one or two boundaries.
  2. No large-rooted trees may be planted within the servitude area.
  3. No buildings or other structures may be erected within the servitude area.
  4. The local authority shall be entitled to deposit temporarily on the land adjoining the servitude such material as may be excavated during the construction, maintenance or removal of sewerage works.
  5. Proposals to overcome detrimental soil conditions shall be contained in the building plans submitted for approval.
  6. The design of all structures and buildings to be erected shall be approved by a structural engineer.
  7. Except with the written approval of the authority the roofs of the buildings shall be of tiles, slate or thatch.
  8. No shop, factory or industry may be erected on the erf. 

From this it is clear that restrictive conditions can play a definite role in determining the character of a township, as well as have certain economic implications.

Other restrictive conditions that may be contained in Title Deeds

  1. Restriction to subdivision of land
  2. Conditions relating to the use to which the stand may be put
  3. Conditions restricting the alienation of the land 

Restrictive conditions may be removed or modified in one of the following ways:

  1. By agreement.
  2. By application to court.
  3. The Administrator has the power to alter, remove or suspend certain restrictions or obligations binding an owner of land in his/her province.
  4. The Minister of Public Works may consent to the amendment or cancellation of conditions registered in Title Deeds.
  5. Provincial legislation contains procedures to remove restrictions on the subdivision of land or the purposes for which the land may be used.

There are a few others that will not be discussed here.

In light of the above it’s imperative that one should carefully study the Title Deed before buying a property or building.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.