METRUST
Liquidators & Insolvency Practitioners
Who We Are
Metrust's insolvency practitioners have decades of experience at the apex of the insolvency industry in South Africa and have handled the liquidations of thousands of companies of various sizes across multiple verticals including those of public companies and many of the country's most high-profile and complex matters.
We strive to maximise returns for all creditors, to protect employment wherever possible and to preserve and realise value for all stakeholders.
We are trusted partners of many of the country's leading law firms and financial institutions and our liquidators are South African Restructuring and Insolvency Practitioners Association (SARIPA) certified Insolvency Practitioners who are members in good standing on the approved panels of the Master of the High Court of South Africa and the South African Revenue Services and members of the International Association of Restructuring Insolvency & Bankruptcy Professionals (INSOL International)
PRACTICE
AREAS
Liquidations
Sequestrations
Consultancy Services
DIRECTORS
NORMAN KLEIN
(IP), BCom, CA(SA), HDip Tax
CHIEF EXECUTIVE OFFICER
GAVIN KLEIN
(IP), BCom, LLB, Attorney RSA
DIRECTOR
CONTACT
METRUST
OUR ADDRESS
For any general enquiries, please send an email to the address above or fill in the following contact form:
Frequently Asked Questions
What laws govern insolvency proceedings in South Africa?
Insolvency in South Africa is governed by three statutes, the application of which depends on the type of insolvency proceedings at hand.
The sequestration of a natural person’s estate is governed by the Insolvency Act 24 of 1936 (the “Insolvency Act”).
The winding-up of close corporations is regulated by the Close Corporations Act 69 of 1984 (the “Close Corporation Act”).
The law regulating the winding-up of companies (both public and private) is contained primarily in the Companies Act 61 of 1973 (the “Old Companies Act”) (which, pursuant to the provisions of item 9 of Schedule 5 of the Companies Act 71 of 2008 (the “New Companies Act”), remains in force under the new company law regime) as read with the laws relating to insolvency insofar as they are applicable.
Only companies that are “insolvent” may be wound up in terms of the provisions of the Old Companies Act, whereas “solvent” companies must be wound up in terms of the New Companies Act.
The term "liquidation" is used in relation to companies and close-corporations whereas the term "sequestration" is used in relation to individuals and trusts.
What is the insolvency test in South Africa?
Under South African law, a debtor is considered insolvent when its liabilities, fairly estimated, exceed its assets, fairly valued. An inability to pay debts is an indicator of insolvency but is not definitive.
What is the purpose of the liquidation / winding-up process?
Liquidation or winding-up is the legally structured process of the realisation of a company’s assets for the benefit of its creditors. Funds remaining after costs and expenses are paid, are distributed to creditors in their prescribed order of preference and according to the creditors’ rights and interests in the company.
How is a company placed in liquidation?
A company may be liquidated either voluntarily, by means of the board of directors passing a resolution to that effect and registering same with the Companies and Intellectual Property Commission (CIPC) established under the Companies Act, or an application can be made to court either by the company itself (a shareholders’ resolution is required) or by a creditor or shareholder of the company.
Most commonly, a court application is brought either by the company or by a creditor on the basis that the company is unable to pay its debts as they fall due. A court can also place a company in liquidation on the basis that liquidation is deemed to be just and equitable.
How are liquidators appointed?
The Master of the High Court appoints provisional liquidators based on the support of creditors in Rand value and in number and will also appoint one or more Previously Disadvantaged Individuals on a discretionary basis. Creditors submit requisitions supporting the nomination of particular liquidators in order to participate in this nomination process.
This appointment process only takes place once a company is in liquidation.
How does a creditor prove a claim?
Only creditors with proven claims may receive dividends when funds are ultimately distributed. Claim documents in the form of sworn affidavits and that include all necessary supporting documentation must be submitted for proof at meetings of creditors held before the Master of the High Court
Creditors are afforded several opportunities to prove claims - either at the first meeting of creditors which is convened by the Master of the High Court by way of notice published in the Government Gazette, the second meeting of creditors which is convened by the liquidators, or at a special meeting of creditors convened for the purposes of proving claims.
What are the different classes of creditors in insolvency proceedings in South Africa?
Secured creditors are creditors holding security for their claims in the form of a special mortgage, landlord’s hypothec, pledge or right of retention. They rank first and are paid from the proceeds of the sale of the secured asset. Where a secured creditor’s claim is not satisfied in full, the unpaid balance is considered a concurrent claim.
Preferent creditors are creditors who do not hold specific security for their claims, but who rank above concurrent creditors. They rank second and are paid from the proceeds of unencumbered assets in a predetermined order as set out in the Insolvency Act. Preferent creditors include employees’ remuneration (up to a prescribed amount) and SARS. The holder of an unperfected general notarial bond is also a preferent creditor.
Concurrent creditors are creditors who are neither secured nor preferent. They rank behind secured and preferent creditors and are paid from any proceeds of unencumbered assets that remain after preferent creditors have been paid the preferent portion of their claims in full. They are paid in proportion to the amounts owing to them.
Can a company trade after it has been placed in liquidation?
Usually, once a company is placed in liquidation it ceases to trade.
However, in certain circumstances, continued trading may be necessary due to the nature of the business itself or in the best interests of creditors (e.g. because the liquidators want to sell the business as a going concern or because certain contracts are best fulfilled by the business in order to maximise returns for creditors). Continued trading by the liquidators must be sanctioned either by the court or by creditors and shareholders.
What is a Liquidation & Distribution Account?
A Liquidation & Distribution Account is a comprehensive document that sets out the details of all funds received by the liquidators from the realisation of assets, all expenses incurred by the liquidators and how the funds available are to be distributed amongst proven creditors in accordance with the provisions of the Insolvency Act.
Once the Master of the High Court approves an account, the liquidators are given permission to advertise that the account will lie open for inspection for a period of not less than 14 days. During this period creditors may inspect the account and lodge objections to it.
Once objections (if any) have been dealt with, the Master of the High Court will confirm the account. The liquidator must give notice of the confirmation of the account by the Master in the Government Gazette.
Once the account is confirmed, the liquidator will distribute any funds that may be available for distribution. If a contribution is required by a creditor (because the assets were insufficient to cover the basic costs of the liquidation), it becomes payable.
In general, creditors are only paid dividends once an account has been confirmed.
Liquidators are similarly only paid their fees in terms of the Insolvency Act once an account has been confirmed.
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