Practical Insolvency Law Advice

Insolvency generally means that a person or entity cannot meet debts or that liabilities exceed assets. A company may also be commercially insolvent if it cannot pay debts as they fall due. The legal consequences depend on the facts, the debtor type and whether creditors have already taken action.

Not always. Some matters can be addressed through negotiated settlements, debt restructuring, business rescue or compromise. Formal sequestration and many liquidation applications are court-driven. The best route depends on the amount of debt, creditor pressure, assets, income and commercial viability.

Preferential payments can create risk, especially when insolvency is likely. Certain payments made before sequestration or liquidation may be challenged if they prefer one creditor over others or prejudice the general body of creditors. Obtain advice before making selective payments in financial distress.

An impeachable disposition is a transaction that may be set aside under insolvency law, such as certain transfers without value, preferences or collusive dealings. The purpose is to protect creditors from transactions that reduce the insolvent estate. Whether a transaction is vulnerable depends on timing, value and intention.

The impact depends on the marriage regime, whether a joint estate exists, whether the spouse signed surety, and whether assets are jointly held. Insolvency can have serious consequences for a spouse's property and credit position. Marital documents should be reviewed before any step is taken.

Formal insolvency proceedings may affect individual execution steps, but it is risky to assume that collection will stop automatically. The timing of service, court orders and estate administration matters. Urgent advice is needed if the sheriff has attached or is about to remove assets.

Rehabilitation is the process by which an insolvent person is released from the legal status of insolvency, either by court order after meeting requirements or automatically after the statutory period, depending on circumstances. The timing and effect should be checked with an attorney before relying on it.

Sometimes. If the business is viable and creditors are willing to negotiate, restructuring or business rescue may be possible. If there is no realistic prospect of paying debts or rescuing the business, delaying liquidation may increase risk for directors and creditors.

Creditors should act quickly to secure documents, confirm the debt, consider demand procedures, assess whether sequestration or liquidation is appropriate, and prepare a claim if an estate is placed under administration. The choice between litigation and insolvency proceedings requires careful cost-benefit analysis.

Debt counselling under the National Credit Act is different from insolvency advice. It may assist consumers with credit agreements, but it does not resolve every form of debt or business insolvency. An attorney can advise on court papers, non-credit debts, suretyships, sequestration risks and creditor litigation.