To sequestrate or not to sequestrate in view of the National Credit Act 34 of 2005: A tale of two judgements
Abstract
The purpose of this article is to consider the impact of some of the provisions of the
National Credit Act1 (the NCA) on sequestration applications in the form of
applications for voluntary surrender, as well as compulsory sequestration. This
matter is of particular relevance in view of two recent cases: in Ex parte Ford2 the
court refused to grant a sequestration order following an application for voluntary
surrender since the applicant-debtors did not, according to the court, avail
themselves adequately of debt relief measures provided for by the NCA where the
bulk of the debt consisted of credit agreements regulated by the NCA; and in a more
recent judgment, Investec Bank Ltd v Mutemeri,3 the respondent-debtors, namely
the consumers, opposed an application for compulsory sequestration on the basis
that the application for debt restructuring pursuant to debt review in terms of the NCA
barred the applicant from proceeding with the application for compulsory
sequestration, since they argued that such an application amounted to debt
enforcement. This discussion therefore considers the impact of the debt relief
remedies and certain special provisions that apply to debt enforcement in terms of
the NCA on sequestration procedures provided for in the Insolvency Act4 in view of the above judgments.
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