The timing of a proposed settlement in insolvency can be a gamble : Corruseal Corrugated KZN v Zakharov [2023] ZAWCHC 48

Abstract

In Corruseal Corrugated KZN v Zakharov ([2023] ZAWCHC 48 (Corruseal Corrugated)), the court considered whether a donation made to a debtor after a provisional sequestration order (but before the final order of sequestration) with a view to enabling the debtor to settle debts against their estate did in fact settle the debtor’s debts to the sequestrating creditor, thereby leaving the sequestrating creditor without locus standi to pursue a final order of sequestration. The court also enquired whether the respondent debtor was factually insolvent. The general legal position is that, upon sequestration of a person’s estate, all their assets at the date of sequestration and all assets acquired after (during) sequestration (except for exempt or excluded assets) vest in the Master of the High Court, and thereafter in the trustee once appointed (s 20 of the Insolvency Act 24 of 1936 (Insolvency Act); Smith, Van der Linde and Calitz Hockly’s Law of Insolvency (2022) par 5.2). Thus, a donation accepted and received by the insolvent after sequestration also vests in the insolvent estate (Bertelsmann, Evans, Harris, Kelly-Louw, Loubser, Roestoff, Smith, Stander, Calitz, De la Rey and Steyn Mars: The Law of Insolvency in South Africa 10ed (2019) par 9.5)