What Is Compulsory Sequestration?

In contrast to voluntary surrender, compulsory sequestration is initiated by and on behalf of creditors. This key difference lies at the heart of the distinction between these two processes.

Who Can Apply and What Are the Requirements?

For a creditor to initiate compulsory sequestration, they must hold a liquidated claim of at least R 100.00. When multiple creditors are involved, their combined liquidated claims against the debtor should total no less than R 200.00.

The creditor must demonstrate the following:

Validity of the claim, granting them the right to pursue the application.

The insolvency of the debtor’s estate.

Belief that sequestration would be advantageous to the creditors’ interests.

It’s essential to recognise that being declared insolvent carries significant implications for an individual’s standing. Apart from impeding access to credit and loans, it can also result in exclusion from certain professions, such as directorship or liquidator roles.