Dividends are only paid to creditors once the Liquidation and Distribution Account is confirmed by the Master of the High Court and the creditor has proved a claim.  The length of this process all depends on the complexity of the particular matter.  Generally an estate will not be finalised within 12 months of the Provisional Order being granted. We suggest that you ensure that your name has been added to the creditors' mailing list so that you can receive circulars and letters from the appointed Insolvency Practitioner.

A danger of contribution usually exists in the Liquidation and Distribution Account once it becomes known that there are not sufficient funds available to defray all administration expenses. In this regard the concurrent creditors would have to contribute pro rata based on their claim in order to settle these costs.  It is advisable to check with our offices whether such a danger of contribution exists before proving a claim.  In most cases the Insolvency Practitioner would be in a position to advise you whether a danger of contribution exists when the time comes to prove your claim.

One of our duties as Liquidators is to investigate the affairs of the corporate entity in order to establish whether there may have been an abuse of the corporate personality.  It also sometimes happens that the Directors or Members conducted the business under insolvent circumstances or traded recklessly.  In these instances the Companies Act and the Close Corporation's Act provides for ways to secure a personal liability claim against them.

In order to prove a claim in the estate, it is imperative that your claim documents are lodged with our offices or alternatively if you would like to lodge it directly with the Master of High Court, one needs to do so at least 24 hours before a scheduled meeting is to take place.  Generally claims can be proved at the First, Second or Special Meeting of Creditors.  Creditors further need to complete a claim form and attach all supporting documents in order to have the claim proved. It is advisable to lodge the claim directly with the Insolvency Practitioner who can investigate whether there may be a danger of contribution.

Once the administration of the estate has been completed, the Insolvency Practitioner will draft an account which sets out the manner in which all the assets of the entity have been liquidated and how the proceeds thereof will be used in settling the administration costs and pay dividends to the creditors who have proved a claim. Once this account has been confirmed creditors may receive a dividend.

One would be considered insolvent if your liabilities exceed the value of your assets. In other words, once you have sold all your assets there would not be enough funds available to settle all your debts. The Insolvency Act also provides for certain acts of insolvency which can lead to the sequestration of an individual or Trust. In this regard Section 8 provides for the following acts of insolvency:

(a) If the debtor leaves the Republic with the intent to evade or delay the payment of his debts;

(b) If a creditor receives a judgment against a debtor and the Sheriff is unable to attach sufficient assets to satisfy the debt;

(c) If a debtor disposes of his property which would have the effect of prejudicing any of the creditors or to prefer one creditor above another;

(d) If a debtor removes any of his property with the intent to prejudice or prefer certain creditors;

(e) If a debtor makes an arrangement with any of his creditors to release him wholly or partially from his debts;

(f) If a debtor published a Notice of Surrender of his estate and he fails to follow through with the application for the surrender;

(g) If the debtor gives a written notice to one of his creditors stipulating that he is unable to pay his debts;

(h) If a trader gives notice that he is transferring his business and after transferring the business he is unable to pay all his debts.

The Master of the High Court appoints a Provisional Insolvency Practitioner based on the nomination forms that are lodged with his office after an order for sequestration or liquidation is granted.  It is imperative that creditors make their voices heard at this stage, as the provisional Practitioner’s appointment could be made final. Creditors also have an opportunity at the First Meeting of Creditors to lodge and prove their claims and nominate their Practitioner of choice.