Abstract
The general policy in South African insolvency law is that assets must be recovered and included in the insolvent estate, and that this action must be to the advantage of the creditors of the insolvent estate. But there are several exceptions to this rule and an asset that is the subject of such an exception may be excluded from the insolvent estate. The Insolvency Act, however, does not expressly distinguish between excluded and exempt assets, thereby resulting in problem areas in the field of exemption law in insolvency in South Africa. It may be argued that the fundamental difference between excluded and exempt assets is that excluded assets should never form part of an insolvent estate and should be beyond the reach of the creditors of the insolvent estate, while exempt assets initially form part of the insolvent estate, but in certain circumstances may be exempted from the estate for the benefit of the insolvent debtor, thereby allowing the debtor to use such excluded or exempt assets to start afresh before or after rehabilitation. Modern society, socio-political developments and human rights requirements have necessitated a broadening of the classes of assets that should be excluded or exempted from insolvent estates. This article considers assets excluded from the insolvent estates of individual debtors by legislation other than the Insolvency Act. It must, however, be understood that these legislative provisions relate to insolvent estates and thus generally overlap in one way or another with some provisions of the Insolvency Act.
Highlights
A fundamental to the general policy in South African insolvency law is that the maximum quantity of assets must be recovered and included in the insolvent estate, to the advantage of the creditors
Depending on the moment at which the Land Bank decides to invoke its rights, it can have an adverse effect on the other existing creditors of the insolvent estate by effectively depleting the insolvent estate of the debtor. This raises the question if there may be an extra duty on the trustee of the insolvent estate to assess the possibility of the Land Bank's altering the content of the insolvent estate, and thereby affecting the benefits of the other creditors
A consequence of the provisions mentioned above which provide for the exclusion or exemption of property from the insolvent estate is that it is possible for an insolvent to acquire an estate that he holds with a title adverse to the trustee of his insolvent estate.[54]
Summary
A fundamental to the general policy in South African insolvency law is that the maximum quantity of assets must be recovered and included in the insolvent estate, to the advantage of the creditors. This means that all property that is owned by an insolvent at the date of sequestration, as well as all property which he acquires prior to his rehabilitation, forms part of the sequestrated estate. There are, several exceptions to this rule and an asset that is the subject of such an exception may not form part of the insolvent estate.[1] The Insolvency Act,[2] does not expressly distinguish between excluded and exempt assets,[3] so various problem areas have arisen in this regard. Be understood that these legislative provisions relate to insolvent estates and generally overlap in one way or another with some provisions of the Insolvency Act.[9]
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