Compulsory Liquidation
- Court-ordered winding-up
- Initiated by creditors or other stakeholders
- Company unable to pay debts
Navigating Financial Distress
Insolvency & Business Rescue Specialists
Financial distress can threaten even the strongest businesses. Whether you're a creditor seeking to recover debts, a director considering business rescue, or facing personal insolvency, Reddy Inc. provides expert guidance through liquidation, sequestration, and business rescue proceedings.
Corporate Insolvency
Liquidation & Business Rescue for Companies
When a company can no longer meet its financial obligations, various legal options exist—from voluntary winding-up to compulsory liquidation, or potentially business rescue as an alternative to liquidation.
Our insolvency team acts for creditors, directors, shareholders, and liquidators, providing strategic advice on the most appropriate course of action and representing clients throughout insolvency proceedings.
Corporate Insolvency Services
- Compulsory Liquidations — Bringing winding-up applications against insolvent companies
- Voluntary Liquidations — Assisting directors with members' and creditors' voluntary winding-up
- Business Rescue Proceedings — Initiating or opposing business rescue applications
- Creditor Claims — Lodging and proving claims in insolvent estates
- Director Liability — Advising on and pursuing reckless trading claims
- Liquidator Appointments — Applying for liquidation orders and liquidator nomination
Insolvency Processes Explained
Understanding Your Insolvency Options
Different circumstances require different insolvency solutions. We help you understand which process is most appropriate for your situation.
Voluntary Liquidation
- Directors resolve to wind up company
- Members' or creditors' voluntary winding-up
- Orderly closure of solvent or insolvent companies
Business Rescue
- Temporary protection from creditors
- Restructuring to save viable businesses
- Alternative to liquidation
Voluntary Surrender
- Individual applies for own sequestration
- Must prove insolvency and advantage to creditors
- Fresh start for over-indebted consumers
Compulsory Sequestration
- Creditor applies to sequestrate debtor
- Debtor commits act of insolvency
- Court satisfaction of requirements
Administration Orders
- Magistrates Court debt restructuring
- Alternative to sequestration
- For debts under R50,000
Provisional Orders
- Interim liquidation or sequestration
- Preserving estate pending final order
- Return date for final hearing
Creditor Meetings
- First and second meetings of creditors
- Proof of claims
- Trustee/liquidator election
Rehabilitation
- Discharge from sequestration
- Automatic after 10 years or earlier by application
- Restoration of legal capacity
Personal Insolvency
Sequestration & Debt Relief for Individuals
Personal insolvency through sequestration offers individuals overwhelmed by debt a fresh start, whilst protecting creditors’ rights to fair distribution of available assets. We guide clients through voluntary and compulsory sequestration proceedings.
Whether you’re considering applying for your own sequestration, defending against a creditor’s application, or seeking to recover debts from an insolvent individual, our team provides clear advice on your options and obligations.
Personal Insolvency Services
- Voluntary Surrender — Applying for voluntary sequestration
- Compulsory Sequestration — Bringing applications against insolvent debtors
- Rehabilitation Applications — Applying for early rehabilitation
- Asset Protection — Advising on exempt assets and property implications
- Trustee Appointments — Nomination and appointment of trustees
- Administration Orders — Alternative debt relief under the Magistrates Court
Business Rescue vs Liquidation
Choosing the Right Path for Financial Distress
Business rescue offers an alternative to liquidation for companies that are financially distressed but have reasonable prospects of being saved.
Viability Assessment
- Is the business fundamentally sound?
- Can it be restructured successfully?
- Are there reasonable rescue prospects?
Timing & Urgency
- Acting before complete insolvency
- Moratorium on creditor actions
- Time to restructure vs immediate liquidation
Stakeholder Impact
- Employee job preservation
- Creditor recovery prospects
- Shareholder interests
Cost Considerations
- Business rescue practitioner fees
- Post-commencement finance needs
- Cost-benefit analysis
Legal Requirements
- Financial distress criteria
- Board resolution or affected person application
- Practitioner appointment process
Outcome Prospects
- Better returns than liquidation?
- Realistic restructuring plan
- Creditor and court approval likelihood
Insolvency FAQs
Common Questions About Insolvency & Business Rescue
Insolvency law is complex. Understanding your options and obligations is the first step toward resolving financial distress.
Liquidation applies to companies and close corporations, whilst sequestration applies to individuals (natural persons) and partnerships. Both are insolvency processes where assets are sold and proceeds distributed to creditors according to legal preferences. The governing legislation and procedures differ slightly.
Yes. If business rescue fails—because the restructuring plan is rejected by creditors or the practitioner concludes there is no reasonable prospect of rescue—the company may be placed into liquidation. Business rescue is not a guarantee against liquidation but rather an attempt to avoid it.
Upon sequestration, your assets vest in the trustee who sells them to pay creditors. However, certain assets are exempt from the insolvent estate, including necessary clothing, bedding, basic household furniture, tools of trade (up to a value), and limited pension benefits. You’ll continue earning income, but the trustee may claim a portion toward creditors.
Sequestration remains in effect until you’re rehabilitated. Automatic rehabilitation occurs 10 years after sequestration. However, you can apply for early rehabilitation after 4 years if you’ve repaid creditors in full, or any time if you can show special circumstances. Once rehabilitated, your legal disabilities are removed.
Yes. You can oppose on various grounds, including disputing that you’re unable to pay debts, challenging the applicant’s standing, or showing that liquidation/sequestration won’t benefit creditors. These applications are defended in the High Court, and timing is critical—you must file an affidavit opposing within specified time frames.
Costs vary depending on complexity and whether the matter is opposed. Applicants must typically pay for the application process and initial costs of the trustee/liquidator. These costs often rank as preferential claims against the insolvent estate. We provide detailed cost estimates during consultation and can advise on funding options.
Financial Distress Requires Expert Guidance
Sequestration & Debt Relief for Individuals
Personal insolvency through sequestration offers individuals overwhelmed by debt a fresh start, whilst protecting creditors’ rights to fair distribution of available assets. We guide clients through voluntary and compulsory sequestration proceedings.
Whether you’re considering applying for your own sequestration, defending against a creditor’s application, or seeking to recover debts from an insolvent individual, our team provides clear advice on your options and obligations.
- Experienced representation in liquidations, sequestrations, and business rescue
- Strategic advice on creditor rights and debt recovery options
- Understanding of both debtor and creditor perspectives
- High Court litigation experience across all insolvency proceedings
- Practical, commercial approach to complex financial distress situations
Related Legal Services
Comprehensive Legal Solutions
From commercial transactions to courtroom litigation, estate planning to regulatory compliance, Reddy Inc. offers integrated legal services across multiple disciplines. Discover how our expertise can support your broader legal needs.
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Comprehensive litigation across all dispute types. Experienced court representation in commercial, civil & contractual matters.
