âBusiness rescue orderâ - The Companies Act 71 of 2008 came into law on 1 May. 2011 and provides for a company or af
Glossary of Terms – South Africa Administration order
“Business rescue order” - The Companies Act 71 of 2008 came into law on 1 May 2011 and provides for a company or affected person as defined to apply to court for an order placing the company under business rescue and appointing a business rescue practitioner to take control of the company’s business. The directors of a company may also file a resolution with the Companies and Intellectual Property Commission placing the company under business rescue This process is not available for an individual or any other form of business.
Administrative receiver
The term administrative receiver is not known. A Trustee in respect of an individual or liquidator in respect of a company is an IP and is appointed by the Master of the High Court but is appointed to realise all assets on behalf of all classes of creditors or shareholders.
Administrative receivership Administrator
The term or process is not known.
Annulment
It means cancellation but the term is not applied in SA laws of Insolvency.
Bankruptcy restrictions order or undertaking
No such procedure but the rehabilitation of an insolvent individual may, under certain circumstances, be delayed.
Charge
The term “security” is used.
Compulsory liquidation
The term is also used in SA when a company is being wound up by virtue of an order of court. The term “petition” is no longer used and is called an “application” to court pursuant to which the company is placed under winding-up or “in liquidation”.
Debenture
Debenture has a similar meaning to that in the UK in South African law.
Disqualification
Under certain circumstances the court may order for the director to be disqualified to act as provided for in terms of the South African laws of Insolvency read with the Companies Act.
Fixed charge
Although the term fixed charge is not known in South Africa the term “special notarial bond” came into effect in 1993 when legislation was promulgated in terms of which specific movable assets would be subject to a security in favour of a creditor.
Floating charge
The term floating charge is not used in South Africa but instead “general notarial bond’ is used which is a preference over the proceeds of certain movable assets of a general nature. The assets may also change (such as stock) and the company may also use the assets in the ordinary course of business. Likewise, in South African insolvency laws, upon the granting of the liquidation order the position is crystallised by virtue of the concurcus creditorum upon the granting of the order.
Guarantee
A guarantee is an agreement to pay a debt owed by a third party in SA law.
Insolvency Practitioner
A person who is deemed to be eligible to take the appointment as trustee or liquidator by the Master of the High Court. In South Africa there are no specific qualifications but the work was primarily reserved for accountants and the legal profession. There are many IP’s who became eligible through experience gained by working for other IP’s. The regulation of insolvency practitioners in South Africa is a much-debated issue.
In a process similar to this, a liquidator is appointed by the Master of the High Court pursuant to a liquidation order or after a company filed a resolution placing itself in voluntary liquidation.
Liquidation (winding up)
This applies to companies or close corporations or other body corporates. It does not apply to individual estates and the estates of a partnership or trust which is “sequestrated”. Ordinarily liquidation in South Africa would be by way of an order of court (compulsory), creditors’ voluntary or members’ voluntary.
Liquidator
The insolvency practitioner appointed by the Master of the High Court to administer the liquidation of a company or close corporation.
Nominee
There is no such procedure in South Africa.
Officer (of a company)
A director, manager or person holding an official office in a company.
Official Receiver
There is no such term on South Africa. The Government body that deals with insolvencies and liquidations is known as the Master of the High Court.
Preferential creditor
A creditor who is entitled to receive payments in priority to the holder of a general notarial bond and the concurrent (unsecured) creditors. These creditors include employees and the South African Revenue Services.
Proof of debt
Similar in South Africa. The Insolvency Act provides for the format of the claim form.
Provisional liquidator
The person appointed to preserve the company’s assets pending the granting of a final liquidation order and the appointment of a final liquidator.
Receiver
The normal term used for a person who attends to the administration of the process pursuant to a scheme of arrangement, or an offer of compromise. Receivers are not formal appointments in terms of South African law.
Receivership
The affairs of a company pursuant to a scheme of arrangement, a compromise is normally termed a receivership.
Rescission
Although the term is used in South Africa it is not used in terms of the cancellation of a winding-up order. The term “discharged” is used in South Africa.
Release
Similar in South Africa.
Secured creditor
Similarly it is a creditor who holds security such as a mortgage bond, a cession of book debts or any other form of security recognised in terms of the laws of insolvency.
Shadow director
The term is not known in South Africa.
Statement of affairs
Similarly in South Africa it is a document under oath completed by an insolvent, a director of a company, or a member of a close corporation providing details of the assets and liabilities of the entities.
Supervisor
Although the term is not used in South Africa, a similar term being used is “business rescue practitioner” pursuant to a resolution or court order placing a company under business rescue.
Unsecured creditor
The term used in South Africa is a concurrent creditor which does not hold any form of security and who is not a preferent creditor.
Voluntary liquidation
Winding up order
It is a method of liquidation not involving the courts. In the case of a solvent company, liquidation is initiated by way of members passing a resolution. In the case of an insolvent company, liquidation is commenced pursuant to a resolution passed by the creditors. An order of court based on a creditors’ application or an application by a company itself to be placed into liquidation.
Frequently used terms Ambulance chaser
This term is not used in South Africa.
Charging order
This term is not used in South Africa although the term possession order or perfection order is used from time to time.
