3.

MANNER OF
LIQUIDATION/WINDING
UP OF JURISTIC
PERSONS

Points to Note:

Winding up by the
Court

Sec 344(f) and 345

Companies Act 1973

Sec 344 (f) says that a

company may be wound-up
by the court if it is unable to
pay its debts.

Sec 345, sets out three situations in which

it is deemed that the company is unable to
pay its debts:
1. Statutory demand which has not been
met:

2. Nulla Bona Return

3. Actual inability to pay debts

Voluntary Winding-up

Companies Act 1973

Sections 349 and 351 353

4.EFFECTS OF INSOLVENCY

1. Absolution from Debts (natural

persons)

2. Effect on Property (natural

persons)

Insolvency Act secs 20 and 23

The exceptions are the following:

1. Remuneration

2.Money received from litigation

for defamation or personal
injury.

4. Pensions and Insurance

5. Property acquired by the
insolvent through use of
money which is lawfully
his

3. Effect on Solvent Spouse

(natural persons)

Section 21

The following property must

be released by the trustee:

1. Property owned before the

marriage to the insolvent

2. Property acquired under an

antenuptial contract

3. Property acquired by the spouse

with his/her own funds during
the marriage, or gifts from
his/her friends or family

4.
Certain insurance polices
5. Property acquired with the
proceeds of any of the property
mentioned above

4. Effect on personal status

and contractual capacity
(natural persons)

4.1 Earning a livelihood

Section 23(3) Insolvency Act.

Insolvent may not do the following

without the trustees consent:

a. carry on the business of a trader

who is a general dealer or
manufacturer OR
b. be employed in the business of a
trader who is a general dealer or
manufacturer

4.2 Holding office

4.3 Contractual capacity

Section 23(2) Insolvency Act

Two exceptions to this general

rule:

i. The insolvent may not enter

into a contract that purports to
dispose of any property of the
insolvent estate.

ii. The insolvent, may not, without

the consent of the trustee, enter
into a contract which adversely
affects the estate.

5.Effect on uncompleted contracts

(natural persons and juristic
persons)
5.1. Common law

5.2. Statutory provisions

Statute amends the common law

position in the following types of
contracts:
i.

Cash sale of immovable

property where the purchaser
is insolvent:

Sec 35 Insolvency Act

Note, in a cash sale where the

seller is sequestrated/
liquidated the common law
applies i.e the trustee liquidator
has an election
BUT trustee/ liquidator cannot
repudiate if it would leave the
purchaser homeless.
( Sarrahwitz v Martiz N.O
(2015) (CC)

ii. Cash sales of movable goods

where the purchaser is
insolvent:
Section 36 of the Insolvency Act

iii Credit sales of movable goods

where the purchaser is
insolvent:
Note, this will be dealt with
under Security in the next

iv Contracts of lease, where

the lessee is insolvent:
Section 37 Insolvency Act

v.

Contracts of lease, where

the lessor is insolvent:

Huur gaat voor koop

=successors in title of the
lessor are bound by an
existing lease agreement
Note:

vi. Contracts of employment,

where the employer is
insolvent:

Section 38 of the Insolvency

Act

6. Effect on legal proceedings

(natural and juristic persons)

6.1 General rule

6.2 Exceptions to general rule (natural

persons only)

7. Effect on execution (natural and

juristic persons)

8. Winding up (juristic persons)