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Article by listed Somerset West Attorney - Nanika Prinsloo


Insolvency is an umbrella term for voluntary surrender, sequestration and liquidation. Individuals sequestrate and entities (Close Corporations, Companies, Trusts) liquidate.

Voluntary surrender and forced sequestration is basically the same thing – it just depends on who brings the application.

(Be sure to also read our other articles on insolvency and on what happens to assets included or excluded in insolvency.)


The sequestration process involves a Court Application. Where there is an Application there must be an Applicant. The Applicant is either yourself for your own sequestration (voluntary surrender) or the Applicant is a creditor of yours (either a friendly or aggressive creditor). The Applications are similar and although there are some different requirements for each, the effect is the same. We will not discuss in detail the differences between the Applications, as this is a general article which serves as background.


A natural person can an Application to place him/herself under sequestration and the term for this is voluntary surrender.

A person is insolvent if his/her liabilities exceed his/her assets and then can apply for voluntary surrender of his/her estate. Anybody can apply for voluntary surrender at any stage as soon as he/she is insolvent, even if they have been or are under debt counselling for example.

The person who wants to sequestration him/herself, will give an Affidavit which explains why he/she avers he/she is insolvent. This will be drafted by the Attorneys who will bring the Application. As soon as the Affidavit is signed, the necessary documents will be issued at Court and a Court date assigned. The debtor (Applicant) does not have to appear in Court, as the Advocate appears on his/her behalf.

On the first Court date, if the Court grants an order, it will be a provisional order and the matter will be postponed for approximately one month. During that month, notice will be given to all creditors and if on the return date no one has opposed the application, the order will be finalised and the person will be sequestrated. The rest of the procedures will follow as with any other sequestration application. (Read more about the rest of the procedures of insolvency on our sister site)


Compulsory Sequestration also involves a Court Application, but the Applicant will be a creditor of the debtor. If it is a creditor that the debtor is not on a good foot with, we refer to it as an “aggressive” sequestration (for example the bank).

However, the banks seldom bring sequestration applications against the average debtor, as it is much cheaper and easier for them to follow the collection procedures: - attach property and sell it and attach your salary.

If it is a creditor that the debtor is on a good foot with, we refer to it as a “friendly” sequestration (for example a family member or a friend that you owe money to).


Where a creditor that you are not on a good foot with bring a sequestration application against a debtor, we refer to it as an aggressive sequestration, but it is still a forced sequestration as opposed to voluntary surrender.

The creditor who brings the application must have established a claim against the debtor : - in other words, the debtor must indeed owe the creditor money. This can be proven by the creditor by delivering a copy of a statement for work delivered or a copy of a contract. If he cannot proof his claim against the debtor, he cannot bring the application for sequestration against the debtor.

A second requirement is that there must also be a benefit to creditors :- in other words, it must be in the interest of all the creditors that the debtor be sequestrated. If there will be no benefit, then the Court will not grant a sequestration order. For example: if there is a house, the benefit to the creditors will lie in the fact that the property can be sold and the proceeds divided amongst the creditors. If there is no house, there must be cash that can be divided amongst the creditors. If there is no house or cash, then the person cannot be sequestrated and the Court will not grant a sequestration order.

Thirdly, the debtor must have committed an act of insolvency. There are several ways in which a debtor can commit an act of insolvency, but the most well-known is where a debtor writes a letter to a creditor which says that he/she cannot pay the debt – that is an act of insolvency and that will allow that creditor to bring the sequestration application.

If a creditor brings an aggressive application against a debtor, the debtor can oppose such an application if he/she is not insolvent or if there is another reason why the order should not be granted.


Friendly sequestration is also a forced sequestration, but the Applicant and the creditor who brings the Application have an amicable relationship (they are friends). The Applicant may be a friend of the debtor whom the debtor owes money to and that the debtor is unable to pay. The debtor will then arrange with the friend to bring a sequestration Application on his/her behalf. The creditor who brings an Application can also be a family member that the debtor owes money to.


The process for both these Applications are the same as it is only the Applicant that differs: with an unfriendly sequestration the creditor is not on a good foot with the debtor and with a friendly sequestration the creditor is on a good foot with the Applicant.

As with voluntary surrender, an Affidavit will be given by the creditor to explain why he avers that the debtor owes him/her money, and will attach proof thereof (contract/statement) and also proof that the debtor has committed an act of insolvency (where the debtor has written a letter to say that he/she cannot pay the debt). In both instances the Applicant must prove that there will be a benefit to creditors to have the debtor sequestrated.

Once the Affidavit has been signed, the necessary documentation will be drafted, issued at Court and a court date assigned. As soon as this is done, the documents will be served on the debtor by the Sheriff.

On the first Court date, if the Court finds the application in order, a provisional sequestration order will be granted and the matter will immediately postponed for about one month. During that month notice will be given to all creditors and if no creditor has opposed by the return date, the order will be made final. Once the order is made final, the person will be sequestrated.

This article written by Nanika Prinsloo of Prinsloo & Associates


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